The S&P 500 made it seven straight positive closes, and the Nasdaq is at 8 in a row. The Dow gained a modest 57-points. The rally in the largest market cap company in the world, Apple, may have had something to do with those gains, but meanwhile we see small and mid cap stocks down yesterday, although the S-fund had a nice gain. We'll talk about that below. The Dow Transportation Index and the I-fund were also down on the day. The 10-year Yield was down (F-fund up), but the dollar was up, giving stocks mixed catalysts.
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The gains in the Dow, S&P 500, Nasdaq, and even the S-fund make these figures seem curious. The NYSE and Nasdaq both had more stocks down on the day than up, and the Nasdaq saw 145 new 52-week lows yesterday. However, the share volume on the Nasdaq was quite positive as the magnificent 7 big tech stocks continue to drag the market indices higher.
Here's the chart of Apple, which was actually down on Friday of last week after reporting after the bell on Thursday. We all know the phrase, As goes Apple, so goes the market, and yesterday was no exception. It recently broke above the descending resistance but it is now at the October highs, so we'll see if there's some selling from those who may have bought at that peak and perhaps just got back to even.
I feel like the S-fund dodged a bullet yesterday. The S-fund is considered the small caps fund, but more precisely it is basically all of the 5000 US stocks minus the stocks that are in the S&P 500. Because of that the S-fund used to track the Wilshire 4500. Now it's just considered the Completion Index. So it's small caps, mid-caps, and larger companies that are not quite big enough for the S&P 500.
Yesterday the Russell 2000 Small Caps Index was down 0.35%.
The S&P 400 Mid Cap Index was down 0.32%.
Smaller regional banks (KRE) were down yesterday and they populate the S-fund - these were the smaller banks that hit the S-fund hard last March.
Also some oil refinery companies that are part of the small to mid cap indices were down very sharply yesterday.
Yet the S-fund was up nicely, and the only thing I could think of that may have helped was that Uber, which is one of the, if not the, largest holding in the S-fund, was up almost 4% on the day. If that was the main catalyst for the gain in the S-fund yesterday, how confident can we be about the gain in the index, unless Uber keeps running higher?
The chart of Uber actually looks pretty healthy after yesterday's positive outside reversal day.
The S&P 500 is at one of the junctures where it is deciding whether to continue in the direction of the prior big move, or change direction. Often we see some churning before that is concluded. The reversals are tendencies whether the churning happens after a down turn or a big rally like we just had, but occasionally, like we saw in April and May of this year, the breakout was in the same direction as the prior trend (up, in that case.)
We've had a positive development recently with the Fed possibly shifting sentiment on rate hikes That is a good reason for a new direction in stocks, but as we had seen in previous years, the question will be whether the broader market indices can rally with the Magnificent 7 stocks doing all of the work.
We have seasonality on the bulls' side, but we have two major wars raging, higher yields for the stock market to compete with, and higher interest rates for smaller companies to deal with, which hurts their bottom lines. We also have a real possibility of a recession starting over the next year if it hasn't started already -- economists generally don't know when recessions start and end until the rear view mirror data gets counted.
We've had some very strong action but it may start to get tougher, or at least not as easy, for stocks to move higher in the short term.
The S&P 500 (C-fund) was up modestly yesterday, and it impressively held up despite all of the resistance that we see in the 4375 - 4400 area. Even if this does flip over, we could see a fake to the upside first to scare the bears, just like they did to the bulls with the fake out on the downside in late October. It has been up for 7 straight days.
We talked about the DWCPF (S-fund) above, but here's the chart dealing with resistance and open gaps below.
The EFA (I-fund) was down rather sharply yesterday considering what happened in the major US stock indices, but the dollar was up 0.34% yesterday, and that was a headwind for the overseas markets.
BND (bonds / F-fund) was up nicely as yields flipped over again. The chart is churning near some overhead resistance, and the question is whether it can break through without more of a retracement of the recent rally. There is a large open gap down near 69.
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
Daily Market Commentary Archives
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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[TD="width: 338, align: center"] Daily TSP Funds Return
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[/TR]
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The gains in the Dow, S&P 500, Nasdaq, and even the S-fund make these figures seem curious. The NYSE and Nasdaq both had more stocks down on the day than up, and the Nasdaq saw 145 new 52-week lows yesterday. However, the share volume on the Nasdaq was quite positive as the magnificent 7 big tech stocks continue to drag the market indices higher.
Here's the chart of Apple, which was actually down on Friday of last week after reporting after the bell on Thursday. We all know the phrase, As goes Apple, so goes the market, and yesterday was no exception. It recently broke above the descending resistance but it is now at the October highs, so we'll see if there's some selling from those who may have bought at that peak and perhaps just got back to even.
I feel like the S-fund dodged a bullet yesterday. The S-fund is considered the small caps fund, but more precisely it is basically all of the 5000 US stocks minus the stocks that are in the S&P 500. Because of that the S-fund used to track the Wilshire 4500. Now it's just considered the Completion Index. So it's small caps, mid-caps, and larger companies that are not quite big enough for the S&P 500.
Yesterday the Russell 2000 Small Caps Index was down 0.35%.
The S&P 400 Mid Cap Index was down 0.32%.
Smaller regional banks (KRE) were down yesterday and they populate the S-fund - these were the smaller banks that hit the S-fund hard last March.
Also some oil refinery companies that are part of the small to mid cap indices were down very sharply yesterday.
Yet the S-fund was up nicely, and the only thing I could think of that may have helped was that Uber, which is one of the, if not the, largest holding in the S-fund, was up almost 4% on the day. If that was the main catalyst for the gain in the S-fund yesterday, how confident can we be about the gain in the index, unless Uber keeps running higher?
The chart of Uber actually looks pretty healthy after yesterday's positive outside reversal day.
The S&P 500 is at one of the junctures where it is deciding whether to continue in the direction of the prior big move, or change direction. Often we see some churning before that is concluded. The reversals are tendencies whether the churning happens after a down turn or a big rally like we just had, but occasionally, like we saw in April and May of this year, the breakout was in the same direction as the prior trend (up, in that case.)
We've had a positive development recently with the Fed possibly shifting sentiment on rate hikes That is a good reason for a new direction in stocks, but as we had seen in previous years, the question will be whether the broader market indices can rally with the Magnificent 7 stocks doing all of the work.
We have seasonality on the bulls' side, but we have two major wars raging, higher yields for the stock market to compete with, and higher interest rates for smaller companies to deal with, which hurts their bottom lines. We also have a real possibility of a recession starting over the next year if it hasn't started already -- economists generally don't know when recessions start and end until the rear view mirror data gets counted.
We've had some very strong action but it may start to get tougher, or at least not as easy, for stocks to move higher in the short term.
The S&P 500 (C-fund) was up modestly yesterday, and it impressively held up despite all of the resistance that we see in the 4375 - 4400 area. Even if this does flip over, we could see a fake to the upside first to scare the bears, just like they did to the bulls with the fake out on the downside in late October. It has been up for 7 straight days.
We talked about the DWCPF (S-fund) above, but here's the chart dealing with resistance and open gaps below.
The EFA (I-fund) was down rather sharply yesterday considering what happened in the major US stock indices, but the dollar was up 0.34% yesterday, and that was a headwind for the overseas markets.
BND (bonds / F-fund) was up nicely as yields flipped over again. The chart is churning near some overhead resistance, and the question is whether it can break through without more of a retracement of the recent rally. There is a large open gap down near 69.
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
Daily Market Commentary Archives
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.
