The Dow was down for a third straight day yesterday but the broader indices were up, trying to regain some of the losses from Monday and Tuesday. We had some stronger than expected weekly employment data, a weaker than expected ISM non-Manufacturing report, and some comments from the Fed, and all that added up to a modestly higher day for stocks, although choppy, and the indices closed off their highs after filling in the overhead gaps.
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The indices have been quite overbought, and investor sentiment is overly bullish, and that is not usually a great sign for the stocks market, but those indicators are not always great for timing market shifts as momentum plays a big role in keeping trends going longer than we think is reasonable.
I have seen several bullish signs for the market and of course stocks have been reacting to that, but I also see some warning signs but until we see something in the charts that indicates that the trend is changing, sticking with the current trend continues to work. That could change today or next week, who knows?
I have been watching this repeating pattern in the S&P 500 chart and as I have been saying, as long as that 15-day EMA continues to hold, I think we have to respect the bullish action. I normally love to try to pick a top or a bottom, and when that works it feels really good, but it seems like more often than not the market trend last longer than any of my guessing.
The open gap from Tuesday's sell off was filled yesterday, although technically we could say that the gap is open until it gets up to Monday's close near 5244. Yesterday's high was 5229.
It was another wild day for the 10-year Treasury Yield which was up, then down on economic data and the Fed, but it was the second negative reversal day in a row, and it is trying to hold above the breakout line from the inverted head and shoulders pattern. Lower yields helped the small caps (S-fund) rebound and outperform the S&P 500.
The dollar was down sharply and that helped the I-fund lead both of the other TSP stock funds.
The EFA (I-fund) filled its open gap from Tuesday, and unlike the S&P 500 chart, it filled it all the way up to Monday's closing price, and surprisingly it only took a day to close back above that 11-day EMA. There could be some resistance in this area so it will be important for it remain positive in the coming days, or the bears will smell some blood in the water.
The Nasdaq 100, home of those big tech stocks, have been holding above its 30-day EMA, which seems to be an important support area for this chart. Perhaps this is a top forming, but we also have to respect that it has been consolidating sideways for 7 weeks without any major damage being done. It could just be building up the ammo for another push higher if the bears can't make a dent here soon.
We get the March Friday's jobs report on Friday and estimates are looking for a gain of 200K to 210K jobs and an unemployment rate of 3.8%. This has become more of a show than anything else lately as big revisions to prior months have become common. What it can do is elevate volatility to either push people out of positions or bring in more FOMO buying that could precede profit taking, so it is tough to get much out of the action of a jobs report Friday until the following week.
Admin Note: I have to take of a few personal things on Thursday afternoon and into Friday so I may not be on top of things and Friday's commentary maybe a quickie. I will be checking in on emails and the forum as much as I can.
The S&P 500 (C-fund) filled that gap as we mentioned above, and the 15-day average continues to hold despite a scare on Tuesday. There were a couple of other scares along the way this year but there have been no closes below that average since January 18th, which is pretty incredible, but debatably unsustainable. The PMO indicator continues to flash a warning sign as it makes lower lows.
DWCPF (S-fund) was up nicely yesterday after retracing some of the mid-March break up candles. It didn't fill in its overhead gap like the S&P 500 and I-fund charts, but its 30-day average continues to hold, so the fill may be coming. There is some resistance near yesterday's highs.
BND (Bonds / F-fund) was up modestly after a positive outside reversal day which could suggest a short-term low here. The jobs report is on deck and that could change things but the precipitous decline over the last week could produce a tricky dead cat bounce that might fail, so I won't get too excited, too quickly, about any short term rally with the recent lower high and lower low.
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: 284, align: center"] Daily TSP Funds Return
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The indices have been quite overbought, and investor sentiment is overly bullish, and that is not usually a great sign for the stocks market, but those indicators are not always great for timing market shifts as momentum plays a big role in keeping trends going longer than we think is reasonable.
I have seen several bullish signs for the market and of course stocks have been reacting to that, but I also see some warning signs but until we see something in the charts that indicates that the trend is changing, sticking with the current trend continues to work. That could change today or next week, who knows?
I have been watching this repeating pattern in the S&P 500 chart and as I have been saying, as long as that 15-day EMA continues to hold, I think we have to respect the bullish action. I normally love to try to pick a top or a bottom, and when that works it feels really good, but it seems like more often than not the market trend last longer than any of my guessing.
The open gap from Tuesday's sell off was filled yesterday, although technically we could say that the gap is open until it gets up to Monday's close near 5244. Yesterday's high was 5229.
It was another wild day for the 10-year Treasury Yield which was up, then down on economic data and the Fed, but it was the second negative reversal day in a row, and it is trying to hold above the breakout line from the inverted head and shoulders pattern. Lower yields helped the small caps (S-fund) rebound and outperform the S&P 500.
The dollar was down sharply and that helped the I-fund lead both of the other TSP stock funds.
The EFA (I-fund) filled its open gap from Tuesday, and unlike the S&P 500 chart, it filled it all the way up to Monday's closing price, and surprisingly it only took a day to close back above that 11-day EMA. There could be some resistance in this area so it will be important for it remain positive in the coming days, or the bears will smell some blood in the water.
The Nasdaq 100, home of those big tech stocks, have been holding above its 30-day EMA, which seems to be an important support area for this chart. Perhaps this is a top forming, but we also have to respect that it has been consolidating sideways for 7 weeks without any major damage being done. It could just be building up the ammo for another push higher if the bears can't make a dent here soon.
We get the March Friday's jobs report on Friday and estimates are looking for a gain of 200K to 210K jobs and an unemployment rate of 3.8%. This has become more of a show than anything else lately as big revisions to prior months have become common. What it can do is elevate volatility to either push people out of positions or bring in more FOMO buying that could precede profit taking, so it is tough to get much out of the action of a jobs report Friday until the following week.
Admin Note: I have to take of a few personal things on Thursday afternoon and into Friday so I may not be on top of things and Friday's commentary maybe a quickie. I will be checking in on emails and the forum as much as I can.
The S&P 500 (C-fund) filled that gap as we mentioned above, and the 15-day average continues to hold despite a scare on Tuesday. There were a couple of other scares along the way this year but there have been no closes below that average since January 18th, which is pretty incredible, but debatably unsustainable. The PMO indicator continues to flash a warning sign as it makes lower lows.
DWCPF (S-fund) was up nicely yesterday after retracing some of the mid-March break up candles. It didn't fill in its overhead gap like the S&P 500 and I-fund charts, but its 30-day average continues to hold, so the fill may be coming. There is some resistance near yesterday's highs.
BND (Bonds / F-fund) was up modestly after a positive outside reversal day which could suggest a short-term low here. The jobs report is on deck and that could change things but the precipitous decline over the last week could produce a tricky dead cat bounce that might fail, so I won't get too excited, too quickly, about any short term rally with the recent lower high and lower low.
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.
