Stocks were mixed yesterday with a very distinct theme: If an index contained Nvidia, it was down. If not, it did well. Nvidia, now the 2nd largest company in the S&P 500, was down almost 7% yesterday and that took down the S&P 500 and Nasdaq. The Dow was up nicely and Nvidia is not part of it. Transports were up. Small caps did well but stalled and backed off near resistance. Yields and the dollar were down helping some sectors, especially the I-fund.
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It was an interesting day and it sort of answered a question that I have been asking for weeks -- can small caps rebound if big tech and the S&P 500 pull back? We got a small taste of it on Friday but it followed up yesterday with another outperformance from the small caps. It's not a trend yet but something to keep an eye on.
Despite some red numbers in the bloated S&P 500 and Nasdaq, there were actually a lot more stocks up yesterday than down, especially on the NYSE.
Here's the Nasdaq 100, the top tech stocks in the Nasdaq Composite, versus the Russell 2000 small caps index, which was getting beaten down since mid-May while the S&P and Nasdaq were soaring. Again, a trend change, or just a temporary adjustment?
How about the S&P 500 Index vs. the Equal Weighted S&P 500 -- same 500 stocks without favor toward the largest companies? Yesterday one was down 0.31% and the other up 0.48%.
And the Equal Weighted chart shows a breakout above a second layer of resistance.
One more, the Dow Transportation Index was up a healthy 0.80% yesterday, but it did tag, stall, and reverse at some descending resistance. It also closed back below the 50 and 200 moving averages so it's tough to get too excited here.
The 10-year Treasury Yield was down slightly as it can't make its way back above that 200-day EMA, but it also can't seem to leave that area and break down. This looks bearish for yields but so far they haven't been able to push them lower, and perhaps there is a reason why they won't go down? On Friday we get the PCE Prices inflation report and this buoyancy below resistance perhaps suggests investors may be concerned about inflation.
The dollar pulled back after Thursday and Friday's big rally to new highs. This helped the I-fund lead the TSP funds on the upside.
As I mentioned, this week's highlight will come on Friday with the PCE Prices and Personal Income and Spending reports, and that will be followed by the Chicago PMI report which, if you recall, was historically low last month.
The S&P 500 (C-fund) was down, created a negative reversal day, and it was an outside reversal day. There's an open gap near 5375 and a fill would test also the breakout area. There's a lot of talk of how stocks and big tech in general, are due for a major correction, and that may be the case, but right now it is doing some simple backing and filling after the breakout earlier this month. It could get worse, but there is support at 5385 ( the 20-day EMA, not shown), which is close to the bottom of that gap and the old rising resistance line. The 50-day EMA could come into play 100-points lower, but we'll cross that bridge when we get there.
DWCPF (S-fund) was up but it clearly struggled at resistance after failing to breakout above its 50-day EMA. It's not dead yet but it needs to follow through on the recent strength and take out that average or the small cap bulls will get restless.
The EFA (I-fund) led the way with the weakness in the dollar. It gapped above the 50-day EMA but ran into the 20-day EMA and stalled. If it doesn't use this opportunity to at least fill that gap just below 80, then the bears will likely pounce again.
BND (bonds / F-fund) continues to consolidate in that old gap from February. It had a great run and it left some open gaps (red) in its wake, so just holding on is impressive. If yields break down, as we talked about above, we could see new highs here.
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.html
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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It was an interesting day and it sort of answered a question that I have been asking for weeks -- can small caps rebound if big tech and the S&P 500 pull back? We got a small taste of it on Friday but it followed up yesterday with another outperformance from the small caps. It's not a trend yet but something to keep an eye on.
Despite some red numbers in the bloated S&P 500 and Nasdaq, there were actually a lot more stocks up yesterday than down, especially on the NYSE.
Here's the Nasdaq 100, the top tech stocks in the Nasdaq Composite, versus the Russell 2000 small caps index, which was getting beaten down since mid-May while the S&P and Nasdaq were soaring. Again, a trend change, or just a temporary adjustment?
How about the S&P 500 Index vs. the Equal Weighted S&P 500 -- same 500 stocks without favor toward the largest companies? Yesterday one was down 0.31% and the other up 0.48%.
And the Equal Weighted chart shows a breakout above a second layer of resistance.
One more, the Dow Transportation Index was up a healthy 0.80% yesterday, but it did tag, stall, and reverse at some descending resistance. It also closed back below the 50 and 200 moving averages so it's tough to get too excited here.
The 10-year Treasury Yield was down slightly as it can't make its way back above that 200-day EMA, but it also can't seem to leave that area and break down. This looks bearish for yields but so far they haven't been able to push them lower, and perhaps there is a reason why they won't go down? On Friday we get the PCE Prices inflation report and this buoyancy below resistance perhaps suggests investors may be concerned about inflation.
The dollar pulled back after Thursday and Friday's big rally to new highs. This helped the I-fund lead the TSP funds on the upside.
As I mentioned, this week's highlight will come on Friday with the PCE Prices and Personal Income and Spending reports, and that will be followed by the Chicago PMI report which, if you recall, was historically low last month.
The S&P 500 (C-fund) was down, created a negative reversal day, and it was an outside reversal day. There's an open gap near 5375 and a fill would test also the breakout area. There's a lot of talk of how stocks and big tech in general, are due for a major correction, and that may be the case, but right now it is doing some simple backing and filling after the breakout earlier this month. It could get worse, but there is support at 5385 ( the 20-day EMA, not shown), which is close to the bottom of that gap and the old rising resistance line. The 50-day EMA could come into play 100-points lower, but we'll cross that bridge when we get there.
DWCPF (S-fund) was up but it clearly struggled at resistance after failing to breakout above its 50-day EMA. It's not dead yet but it needs to follow through on the recent strength and take out that average or the small cap bulls will get restless.
The EFA (I-fund) led the way with the weakness in the dollar. It gapped above the 50-day EMA but ran into the 20-day EMA and stalled. If it doesn't use this opportunity to at least fill that gap just below 80, then the bears will likely pounce again.
BND (bonds / F-fund) continues to consolidate in that old gap from February. It had a great run and it left some open gaps (red) in its wake, so just holding on is impressive. If yields break down, as we talked about above, we could see new highs here.
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.html
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.
