Stocks did some digesting of Wednesday's monster rally yesterday, but it did a pretty good job of coming off the lows and closing near the highs of the day despite a hot CPI report and more troubling geopolitical headlines creating uncertainty, so volatility will likely continue. The Dow lost 112-points and the losses were modest in the boarder indices, although the I-fund struggled. Bonds were down making new lows again as the yield on the 10-year moved back over 2%.
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The S&P 500 (C-fund) continues to hold the February 24th low, the day of the invasion, and the recent test has been holding so far. It is also back above the January low so it feels like it is trying to carve out a bottom, but it is still below a lot of key resistance, including the 200-day EMA. The 50-day EMA is actually still above the 200, but it is falling fast. This could be setting up a short-term oversold rally, but if those do cross, it won't be great sign for the intermediate term.
The DWCPF (small caps / S-fund) held up pretty well considering the 3.3% gain on Wednesday, but some follow through on the upside would have been more a convincing bullish move. There's still tentativeness out there but the bears were tentative as well.
The EFA (I-fund) lagged yesterday after the near 5% gain on Wednesday, so it seems to just be doing some backing and filling of that gap just below 69. This is very oversold but it has been held hostage by the news in Easter Europe and how that will impact the European economy.
BND (Bonds / F-fund) made a new low as yields moved higher again. This is what happens in bear markets, which the bond market has been in for many months now.
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. Have a great weekend!
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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In a headlines driven market we're never out of the woods, but sometimes these headlines create opportunities when things get too pushed too far, too fast. As I mentioned the other day, even long term bear markets like 2008 saw weeks and even months of gains after extreme selling offs.
So we are in market that is acting poorly but it's been two and a half months of downside action with only the occasional pop higher. Most of the indicators that I follow are getting deep on the oversold, overly bearish, or extreme in some way and barring a headline that can make it even more extreme, we're probably getting set up for a decent push higher. Whether that marks a low for this correction, I don't know. Maybe it goes on a lot longer, but we should still see rebounds and relief rallies either way. And if February's low turns out to be the low, then even better for the bulls.
The Yield on the 10-year Treasury is back over 2% so the rattling from the war seems to be over and we're back in inflation mode, and yesterday the CPI confirmed that with a 7.9% year over year increase in consumer prices. But that's rear-view mirror data at this point and the market will start looking ahead to the next reports, the next earnings season, and the next catalyst.
The price of oil may not have stabilized, but it has certainly come down as it is quickly $24 off the highs.. At this point it's the volatility that most concerning, but also the trend is still up as support is still holding despite the recent decline. The question is, how much will the consumers be taken advantage of regarding gas prices with those 3 days of oil trading over $110, up to $130, when it has come down so quickly?
The seasonality chart, if it matters in volatile times like this, suggests a bullish pocket for the next week, but if backs off again the following week.
Chart provided courtesy of www.sentimentrader.com
The rumblings out of China could ignite more trade war talk giving the market another reason to get cranky, but so far it's all talk and no action. The Fed's FOMC meeting starts on the 15th and we should get a rate hike announcement on the 16th. It looks pretty certain that we'll see a 0.25% hike despite many saying a 0.50% would be more effective with inflation running amuck.
CNBC had another special last night called "Tech Shock" so maybe it's time for tech stock relief rally? I guess they are filling in Cramer's spot while he is on vacation or something.
So we are in market that is acting poorly but it's been two and a half months of downside action with only the occasional pop higher. Most of the indicators that I follow are getting deep on the oversold, overly bearish, or extreme in some way and barring a headline that can make it even more extreme, we're probably getting set up for a decent push higher. Whether that marks a low for this correction, I don't know. Maybe it goes on a lot longer, but we should still see rebounds and relief rallies either way. And if February's low turns out to be the low, then even better for the bulls.
The Yield on the 10-year Treasury is back over 2% so the rattling from the war seems to be over and we're back in inflation mode, and yesterday the CPI confirmed that with a 7.9% year over year increase in consumer prices. But that's rear-view mirror data at this point and the market will start looking ahead to the next reports, the next earnings season, and the next catalyst.
The price of oil may not have stabilized, but it has certainly come down as it is quickly $24 off the highs.. At this point it's the volatility that most concerning, but also the trend is still up as support is still holding despite the recent decline. The question is, how much will the consumers be taken advantage of regarding gas prices with those 3 days of oil trading over $110, up to $130, when it has come down so quickly?
The seasonality chart, if it matters in volatile times like this, suggests a bullish pocket for the next week, but if backs off again the following week.
Chart provided courtesy of www.sentimentrader.com
The rumblings out of China could ignite more trade war talk giving the market another reason to get cranky, but so far it's all talk and no action. The Fed's FOMC meeting starts on the 15th and we should get a rate hike announcement on the 16th. It looks pretty certain that we'll see a 0.25% hike despite many saying a 0.50% would be more effective with inflation running amuck.
CNBC had another special last night called "Tech Shock" so maybe it's time for tech stock relief rally? I guess they are filling in Cramer's spot while he is on vacation or something.
The S&P 500 (C-fund) continues to hold the February 24th low, the day of the invasion, and the recent test has been holding so far. It is also back above the January low so it feels like it is trying to carve out a bottom, but it is still below a lot of key resistance, including the 200-day EMA. The 50-day EMA is actually still above the 200, but it is falling fast. This could be setting up a short-term oversold rally, but if those do cross, it won't be great sign for the intermediate term.
The DWCPF (small caps / S-fund) held up pretty well considering the 3.3% gain on Wednesday, but some follow through on the upside would have been more a convincing bullish move. There's still tentativeness out there but the bears were tentative as well.
The EFA (I-fund) lagged yesterday after the near 5% gain on Wednesday, so it seems to just be doing some backing and filling of that gap just below 69. This is very oversold but it has been held hostage by the news in Easter Europe and how that will impact the European economy.
BND (Bonds / F-fund) made a new low as yields moved higher again. This is what happens in bear markets, which the bond market has been in for many months now.
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. Have a great weekend!
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.
