If you don't like the way the market is trading, just wait an hour. It may change. That's been the theme in recent days as yesterday's early selling was bought up and the bulls quickly took over. The Dow rallied from a triple digit loss to close with a gain of 278-points. The small caps were down sharply early, more than 1% in the case of the Russell 2000, before reversing and closing with a modest gain, although they did lag the large caps. The dollar was up, bonds were flat, and oil was down, but it also rallied strongly off the lows.
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Investors are dealing with the concerns of a Covid comeback, with the yield on the 10-year continuing to confirm the possible economic weakness, yet the S&P 500 made a new all time closing high yesterday as stocks climb that wall of worry. That's nothing new for the stock market, but it can be frustrating for some investors who are just trying to play a little defense with the constant Covid news being thrown at them.
The U.S. is nearing its debt ceiling again (who cares, right?) and, as of right now there has been no extension of the eviction moratorium, which could put some people out of their homes - but they're working on it and it could happen at any time. That could have some ramifications if it doesn't get done.
The yield on the 10-year Treasury was up slightly yesterday but certainly nothing declaring a low is in as it barely moved off of Monday's low.
The dollar was up slightly and it has been sitting on its 50-day EMA, and below the 200-day EMA, and one of those will have to give way soon.
The move up in the dollar was fairly minor but it may have added some pressure to oil, which was down 1%. It is also an indicator for economic strength, and it has pulled back from its early July highs. However, it did see a positive reversal yesterday to help it close a few cents above its 50-day EMA. That looks like a possible inverted head and shoulders - if it is not a lower high. The inverted H&S would be bullish. A lower high would not, but the lower high would need a close below 65 at this point to confirm that.
Internally the advance / decline numbers were mostly very positive although there were few more down issues on the Nasdaq than up. Also the Nasdaq had another 128 new lows, which continues to be interesting since the Nasdaq Composite is just barely off its all times highs.
The July jobs report will be released on Friday and estimates are looking for a gain of 925,000 jobs, and an unemployment rate of 5.6%.
There is a bull flag on the S&P 500 chart, and the small caps escaped another test of the 50-day EMA, so there is a chance that we could see a move higher this week, but seasonality remains a negative for the market this month, so the jobs report could make or break the week.
The S&P 500 (C-fund) fought off a morning loss and bounced off the 20-day EMA again to come roaring back and close at the highs of the day, which happened to be a new all time high. It is now back near the top of that red rising trading channel, which has been resistance for some time, but that resistance is obviously rising. Now we have a bull flag formed and that generally portends an eventual breakout to the upside. So with resistance overhead, we'll have to see how that plays out.
The DWCPF (S-fund) was up moderately, lagging the large caps, but that was a clear positive reversal day. It is still below that red resistance line that we've been noting for weeks, but it was able to fight off another attempted push below the 50-day EMA - the second in the 5 days. It did the same thing last week on Turnaround Tuesday which led to a rally on Wednesday.
The EFA / I-fund had another good day as it moved up and filled that small open gap from mid-June. Is that going to now act as resistance? There is a rising support line coming off the July low that has been holding for a couple of weeks, and it is now above that blue bear flag. Interesting situation, especially if the top of that gap holds.
The Dow Transportation Index led on the upside with a gain well over 1% on the day. However, that only took it up to the resistance area where the 100-day EMA is meeting the descending resistance line and the top of what could be a bear flag.
The BND (bonds / F-fund) tagged that double top area again and backed off, but it did close with a slight gain. The trend remains up but the area just below 87 seems to want to hold right now. However, the more often it knocks on that door, the more likely it will be to break through that resistance.
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
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.
Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
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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Investors are dealing with the concerns of a Covid comeback, with the yield on the 10-year continuing to confirm the possible economic weakness, yet the S&P 500 made a new all time closing high yesterday as stocks climb that wall of worry. That's nothing new for the stock market, but it can be frustrating for some investors who are just trying to play a little defense with the constant Covid news being thrown at them.
The U.S. is nearing its debt ceiling again (who cares, right?) and, as of right now there has been no extension of the eviction moratorium, which could put some people out of their homes - but they're working on it and it could happen at any time. That could have some ramifications if it doesn't get done.
The yield on the 10-year Treasury was up slightly yesterday but certainly nothing declaring a low is in as it barely moved off of Monday's low.
The dollar was up slightly and it has been sitting on its 50-day EMA, and below the 200-day EMA, and one of those will have to give way soon.
The move up in the dollar was fairly minor but it may have added some pressure to oil, which was down 1%. It is also an indicator for economic strength, and it has pulled back from its early July highs. However, it did see a positive reversal yesterday to help it close a few cents above its 50-day EMA. That looks like a possible inverted head and shoulders - if it is not a lower high. The inverted H&S would be bullish. A lower high would not, but the lower high would need a close below 65 at this point to confirm that.
Internally the advance / decline numbers were mostly very positive although there were few more down issues on the Nasdaq than up. Also the Nasdaq had another 128 new lows, which continues to be interesting since the Nasdaq Composite is just barely off its all times highs.
The July jobs report will be released on Friday and estimates are looking for a gain of 925,000 jobs, and an unemployment rate of 5.6%.
There is a bull flag on the S&P 500 chart, and the small caps escaped another test of the 50-day EMA, so there is a chance that we could see a move higher this week, but seasonality remains a negative for the market this month, so the jobs report could make or break the week.
The S&P 500 (C-fund) fought off a morning loss and bounced off the 20-day EMA again to come roaring back and close at the highs of the day, which happened to be a new all time high. It is now back near the top of that red rising trading channel, which has been resistance for some time, but that resistance is obviously rising. Now we have a bull flag formed and that generally portends an eventual breakout to the upside. So with resistance overhead, we'll have to see how that plays out.
The DWCPF (S-fund) was up moderately, lagging the large caps, but that was a clear positive reversal day. It is still below that red resistance line that we've been noting for weeks, but it was able to fight off another attempted push below the 50-day EMA - the second in the 5 days. It did the same thing last week on Turnaround Tuesday which led to a rally on Wednesday.
The EFA / I-fund had another good day as it moved up and filled that small open gap from mid-June. Is that going to now act as resistance? There is a rising support line coming off the July low that has been holding for a couple of weeks, and it is now above that blue bear flag. Interesting situation, especially if the top of that gap holds.
The Dow Transportation Index led on the upside with a gain well over 1% on the day. However, that only took it up to the resistance area where the 100-day EMA is meeting the descending resistance line and the top of what could be a bear flag.
The BND (bonds / F-fund) tagged that double top area again and backed off, but it did close with a slight gain. The trend remains up but the area just below 87 seems to want to hold right now. However, the more often it knocks on that door, the more likely it will be to break through that resistance.
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
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.
Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
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.
