The major indices have held up well recently but I can't say that I love the action as we see some deterioration in other parts of the market that could be raising more red flag than this economic environment already has. Rising yields, rising oil prices, selling in the economically sensitive Transportation Index, the High Yield Corporate Bonds are falling again, and that's not a good combination. The Dow lost 269-points and it, the S&P 500, and the Nasdaq have been doing a good job of holding up despite this underlying trouble.
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The yield on the 10-year Treasury crawled back above 3% yesterday.
The Dow Transportation Index fell almost 4% yesterday, so this market leader failed at key resistance and is flirting with some last resort support.
The price of oil hit a 3-month high closing over $122 a barrel. Notice how the the S&P has been moving counter to that price, and now it is trying to move above resistance and pointing toward the March highs.
The HYG is the High Yield Corporate Bond Fund and it is a gauge of the shape of the credit market, and the stock market tends to follow this one. It has been going straight down while the major indices have been moving sideways. Which will follow which?
There are warning signs but the market can tend to climb a wall of worry, and of course being in a bear market all year makes us wonder how much of the current negative news has already been priced into the stock indices?
We get the key inflation gauge CPI report tomorrow morning so if anyone wants to adjust their account before that possible market mover, this morning will be your last chance to do so. I'm not suggesting which way the market will go because I have no idea what the report will show. Sometimes these reports can be market turning, or direction determinant, but other times it can move the market in a direction that can be faded, and give you an opportunity that you've been waiting for.
For example, if you have been waiting for a good dip to buy and the CPI sends stocks lower, you get an opportunity to buy lower. But the opposite is also true if you were looking to sell a rally and stocks move up after the report.
The best argument for the bullish case are the bull flags on some of the charts and, from a contrarian viewpoint, the continued excess pessimism from investors.
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We have had a lot of new eyes viewing TSP Talk recently looking for answers to some of the problems the new TSP website has created for some of us. Many have found their way to the forum already but if you haven't we have some informative discussions going on regarding the TSP website upgrade, creating new accounts, IFTs, etc. Chances are, if you are having a problem, someone else may have also had the problem and some have figured it out. If you have figured out a problem, we'd appreciate it if you shared your solution. Here's the link to those discussions:
https://www.tsptalk.com/mb/tsp-talk-news-etc-/
The one change that has been impacting TSP Talk is when I post the daily share prices and update the AutoTracker. The tsp.gov share prices used to get posted just after 7 PM ET each day but since the upgrade it has been several hours later - sometimes so late that I can't get to it until the following morning. It was 2 AM the other day.
Hopefully that is just a temporary issue while they work on all of the other issues. Otherwise, not only will the AutoTracker be updated later every day, but it may impact my schedule of when I upload the daily commentaries.
The S&P 500 (C-fund) has consolidated nicely after the late May rally, but the battle is clearly between the green 20-day EMA as support, and the purple 50-day EMA as resistance. It looks like a bull flag, which is good, but market timers love to sell at the 50-day EMA during bear markets. Perhaps the CPI report will get the S&P to break the range on Friday?
The DWCPF (S-fund) is in the same situation - above the green 20-day EMA and below the purple 50-day EMA. This one is a tougher call because the chart is a little more bearish with that large red bearish flag formation. A move above 1800 would likely send it up to the blue 200-day EMA, but that's going to be a difficult task.
The EFA (I-fund) is near the bottom of the "gappy" area and it's also finding some support at the descending support line, which used to be resistance before the breakout above it a week or two ago. The 68.50 - 69 area need to hold.
BND (bonds / F-fund) was down again as this bear market in bonds will not go away.
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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[TR]
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The yield on the 10-year Treasury crawled back above 3% yesterday.
The Dow Transportation Index fell almost 4% yesterday, so this market leader failed at key resistance and is flirting with some last resort support.
The price of oil hit a 3-month high closing over $122 a barrel. Notice how the the S&P has been moving counter to that price, and now it is trying to move above resistance and pointing toward the March highs.
The HYG is the High Yield Corporate Bond Fund and it is a gauge of the shape of the credit market, and the stock market tends to follow this one. It has been going straight down while the major indices have been moving sideways. Which will follow which?
There are warning signs but the market can tend to climb a wall of worry, and of course being in a bear market all year makes us wonder how much of the current negative news has already been priced into the stock indices?
We get the key inflation gauge CPI report tomorrow morning so if anyone wants to adjust their account before that possible market mover, this morning will be your last chance to do so. I'm not suggesting which way the market will go because I have no idea what the report will show. Sometimes these reports can be market turning, or direction determinant, but other times it can move the market in a direction that can be faded, and give you an opportunity that you've been waiting for.
For example, if you have been waiting for a good dip to buy and the CPI sends stocks lower, you get an opportunity to buy lower. But the opposite is also true if you were looking to sell a rally and stocks move up after the report.
The best argument for the bullish case are the bull flags on some of the charts and, from a contrarian viewpoint, the continued excess pessimism from investors.
-----------
We have had a lot of new eyes viewing TSP Talk recently looking for answers to some of the problems the new TSP website has created for some of us. Many have found their way to the forum already but if you haven't we have some informative discussions going on regarding the TSP website upgrade, creating new accounts, IFTs, etc. Chances are, if you are having a problem, someone else may have also had the problem and some have figured it out. If you have figured out a problem, we'd appreciate it if you shared your solution. Here's the link to those discussions:
https://www.tsptalk.com/mb/tsp-talk-news-etc-/
The one change that has been impacting TSP Talk is when I post the daily share prices and update the AutoTracker. The tsp.gov share prices used to get posted just after 7 PM ET each day but since the upgrade it has been several hours later - sometimes so late that I can't get to it until the following morning. It was 2 AM the other day.
Hopefully that is just a temporary issue while they work on all of the other issues. Otherwise, not only will the AutoTracker be updated later every day, but it may impact my schedule of when I upload the daily commentaries.
The S&P 500 (C-fund) has consolidated nicely after the late May rally, but the battle is clearly between the green 20-day EMA as support, and the purple 50-day EMA as resistance. It looks like a bull flag, which is good, but market timers love to sell at the 50-day EMA during bear markets. Perhaps the CPI report will get the S&P to break the range on Friday?
The DWCPF (S-fund) is in the same situation - above the green 20-day EMA and below the purple 50-day EMA. This one is a tougher call because the chart is a little more bearish with that large red bearish flag formation. A move above 1800 would likely send it up to the blue 200-day EMA, but that's going to be a difficult task.
The EFA (I-fund) is near the bottom of the "gappy" area and it's also finding some support at the descending support line, which used to be resistance before the breakout above it a week or two ago. The 68.50 - 69 area need to hold.
BND (bonds / F-fund) was down again as this bear market in bonds will not go away.
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.
