There was a lot of green in those headline indices yesterday, but much of the broader market took a day of rest yesterday allowing big tech to do all the work. There was some late selling as well, particularly in the S&P 500, when the index pulled back after hit an intraday all time high, so the question of whether this will experience a double top pullback is right here, right now. Bond yields and the dollar moved up modestly and that helped keep the small caps and the I-fund from participating in the rally yesterday.
You can see the latest updated TSP share prices and returns, usually posted daily by 8:30 PM ET here: https://www.tsptalk.com/tsp_share_prices.php
Despite seeing all of those gains in the indices above, you can see here that it was far from a bullish day for the broader market. Twice as many stocks were down on the NYSE, than up. It wasn't as bad for the Nasdaq but it was still quite negative - until you look at share volume where the heavily traded big techs of the Nasdaq did most of the lifting.
The S&P 500 did make an intraday new high, so seeing a good ratio of new highs to new lows on the NYSE and Nasdaq is encouraging.
The 10-year Treasury Yield stopped going down for a few days and the question is whether that 4.5% area is a floor or just a temporary pausing point for the recent pullback.
Here's the S&P 500 chart showing that brief move into new high territory yesterday before we saw the a slight pullback off those highs. That's not unusual but the aftermath of double tops is not always the same. Sometimes you get a minor choppy sideways move before a breakout to new highs. Other times there is a more severe pullback like in September of last year when the S&P pulled back about 250-points before bouncing back making a new high.
We also saw a severe double top pullback in late 2022, but that was the end of the bear market and the eventual breakout in early 2023 was the dawn of the current bull market.
The market leading Dow Transportation Index was down yesterday but made it five consecutive closes above the 50-day EMA and the top of that bear flag. It looks safe, but those open gaps will keep us looking over our shoulders.
The Russell 2000 small caps (IWM) is still in its bear flag after a false breakout on Tuesday. It is above the 50-day EMA after that successful test of the 200-day EMA last week, so I'd like to give this the benefit of the doubt, but I will feel better about this chart if it can remain above 230 for a few closes.
This post-holiday week does have a history of struggling, but so far this week has not been much of a struggle. Even the 0.25% loss in the S-fund was coming off the heals of the 1.7% gain the day before. Normal, but as I said, keep an eye on these charts to see if some of the stubborn resistance areas are going to continue to hold.
Next week will be much more catalyst driven with the FOMC meeting, the PCE inflation data, and 6 of the Magnificent 7 stocks reporting earnings. Support and / or resistance may get taken out by some of those the headlines, if they don't front run it this week.
The S&P 500 (C-fund) hit the double top and pulled back slightly to close just off the all time closing high. There are now 4 open gaps below, and now that it is at resistance, the bears have a chance to do some damage. But the underinvested bulls may be quick to buy the dips so it's a classic stand off.
The PMO indicator crossover on the bottom is giving a green light to this chart for the intermediate-term, but it also means it is overbought in the short-term. Neither a breakout nor a breakdown would surprise me, and given the upcoming catalysts, you never know, we could get both in the next week or so.
DWCPF (S-fund) stalled yesterday but the chart looks better then the small caps of the Russell 2000, however it is unlikely that the two would move in different directions. 2400+ looks like a possible green light, and being below that opens the possibility of backing and filling in some of those open gaps.
ACWX (the I-fund tracking index) was down 0.13% yesterday and the I-fund was given a gain of 0.19%. Resistance is just overhead near 53.75 after that explosive rally off the lows. This area is going to be a pretty big test for this fund.
BND (bonds) stalled like it hit a wall when it tested the 50-day EMA from below. Is it going to try to fill in that open gap or can the 200-day EMA hold it up, now that it is above it?
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
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Posted daily at www.tsptalk.com/comments.php
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
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You can see the latest updated TSP share prices and returns, usually posted daily by 8:30 PM ET here: https://www.tsptalk.com/tsp_share_prices.php
Despite seeing all of those gains in the indices above, you can see here that it was far from a bullish day for the broader market. Twice as many stocks were down on the NYSE, than up. It wasn't as bad for the Nasdaq but it was still quite negative - until you look at share volume where the heavily traded big techs of the Nasdaq did most of the lifting.
The S&P 500 did make an intraday new high, so seeing a good ratio of new highs to new lows on the NYSE and Nasdaq is encouraging.
The 10-year Treasury Yield stopped going down for a few days and the question is whether that 4.5% area is a floor or just a temporary pausing point for the recent pullback.
Here's the S&P 500 chart showing that brief move into new high territory yesterday before we saw the a slight pullback off those highs. That's not unusual but the aftermath of double tops is not always the same. Sometimes you get a minor choppy sideways move before a breakout to new highs. Other times there is a more severe pullback like in September of last year when the S&P pulled back about 250-points before bouncing back making a new high.
We also saw a severe double top pullback in late 2022, but that was the end of the bear market and the eventual breakout in early 2023 was the dawn of the current bull market.
The market leading Dow Transportation Index was down yesterday but made it five consecutive closes above the 50-day EMA and the top of that bear flag. It looks safe, but those open gaps will keep us looking over our shoulders.
The Russell 2000 small caps (IWM) is still in its bear flag after a false breakout on Tuesday. It is above the 50-day EMA after that successful test of the 200-day EMA last week, so I'd like to give this the benefit of the doubt, but I will feel better about this chart if it can remain above 230 for a few closes.
This post-holiday week does have a history of struggling, but so far this week has not been much of a struggle. Even the 0.25% loss in the S-fund was coming off the heals of the 1.7% gain the day before. Normal, but as I said, keep an eye on these charts to see if some of the stubborn resistance areas are going to continue to hold.
Next week will be much more catalyst driven with the FOMC meeting, the PCE inflation data, and 6 of the Magnificent 7 stocks reporting earnings. Support and / or resistance may get taken out by some of those the headlines, if they don't front run it this week.
The S&P 500 (C-fund) hit the double top and pulled back slightly to close just off the all time closing high. There are now 4 open gaps below, and now that it is at resistance, the bears have a chance to do some damage. But the underinvested bulls may be quick to buy the dips so it's a classic stand off.
The PMO indicator crossover on the bottom is giving a green light to this chart for the intermediate-term, but it also means it is overbought in the short-term. Neither a breakout nor a breakdown would surprise me, and given the upcoming catalysts, you never know, we could get both in the next week or so.
DWCPF (S-fund) stalled yesterday but the chart looks better then the small caps of the Russell 2000, however it is unlikely that the two would move in different directions. 2400+ looks like a possible green light, and being below that opens the possibility of backing and filling in some of those open gaps.
ACWX (the I-fund tracking index) was down 0.13% yesterday and the I-fund was given a gain of 0.19%. Resistance is just overhead near 53.75 after that explosive rally off the lows. This area is going to be a pretty big test for this fund.
BND (bonds) stalled like it hit a wall when it tested the 50-day EMA from below. Is it going to try to fill in that open gap or can the 200-day EMA hold it up, now that it is above it?
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
For more info our other premium services, please go here... www.tsptalk.com/premiums.php
To get weekly or daily notifications when we post new commentary, sign up HERE.
Posted daily at www.tsptalk.com/comments.php
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
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