Thursday was another choppy day for stocks, but by the close the bulls had pulled out a modest victory. The gains were fine but twice the indices pulled back from the intraday highs so the bears haven't gone away yet, and the indices try to consolidate near do or die support levels. The Dow gained 109-points but it never did come back to hit the opening bell highs of the few minutes of trading. Bonds had a good day as yields fell below recent support.
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By the time some of you read this we may have gotten the PCE Prices and Personal Income reports, some of the Fed favorites for inflation data. It could be a market mover, and as you'll see in many of the charts, we have some make or break levels being tested right now. Estimates from briefing.com are looking for a monthly gain of 0.4% (or +4.3% year over year) on the PCE and +0.9% on the income data.
Internally we saw some good numbers with two stocks up on the NYSE for every one that was down. The Nasdaq wasn't quite that strong, but Nvidia earnings helped that index lead on the upside, despite more 52 week lows than highs made on the day. Share volume was positive, but nothing significant.
The 10-Year Treasury Yield was up early but flipped over to create a negative outside reversal day, and it closed below the December high potentially creating a failed breakout on the chart, but it will depend on if it can quickly bounce back or not. The rising channel is intact so the battle today will be between the 38.50 support, and resistance near 39.
With today being Friday and the final day for this week's candlestick to either hold or break below support. So far the pullback is staying within acceptable parameters as far as being 5% off the highs and remaining above that double layer of support near 3950 or so. The PCE and Income data today might be the determining factor.
The Dow Transportation Index was up over 1% yesterday but you can see it is in kind of a purgatory area between some support and some resistance. Over all the chart looks bullish but it really needs to get back above 14,750 to prove the recent decline was just a moderate pullback that didn't do any technical damage. A move below the 50-day EMA near 14,500 wouldn't be a disaster, but you would have expected the bulls to make a move to buy in that area. If they don't, then that would tell us something.
Like many investors, I am very worried about the "story", but again the charts are still holding up at this point, and the bulls still have a shot at keeping the intermediate term rally alive after this short term pullback.
The S&P 500 (C-fund) rallied enough to recapture the 50 and 200-day EMAs yesterday, while the 50-day simple average (orange) has been holding on a closing basis since the close below it on January 19. The positive reversal day yesterday looks familiar and more sideways consolidation action near the lows would also resemble some prior short-term lows. The one in November (blue) was less like a consolidation and more of a "V" low, although we did get one sell off after Election Day that reversed back up the following day.
DWCPF (S-fund) also had a positive reversal day and the lows conveniently were right at the 200-day EMA. There is that small open gap above 1760 and filling that could be all this rally wants to do, but it is a bull flag and another trip to the top of the flag is also very possible.
The EFA (I-fund) was up yesterday but it has been trending slightly lower for weeks now, making a nice bullish looking flag formation. The 69 area looks like decent support at this point. A move above 71 would likely bring in more buyers.
BND (bonds / F-fund) was up yesterday and we may be watching the right shoulder of a head and shoulders pattern forming. That could mean good things for bonds and stocks in the short-term, but maybe not so much once the right shoulder peaks.
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 so much 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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By the time some of you read this we may have gotten the PCE Prices and Personal Income reports, some of the Fed favorites for inflation data. It could be a market mover, and as you'll see in many of the charts, we have some make or break levels being tested right now. Estimates from briefing.com are looking for a monthly gain of 0.4% (or +4.3% year over year) on the PCE and +0.9% on the income data.
Internally we saw some good numbers with two stocks up on the NYSE for every one that was down. The Nasdaq wasn't quite that strong, but Nvidia earnings helped that index lead on the upside, despite more 52 week lows than highs made on the day. Share volume was positive, but nothing significant.
The 10-Year Treasury Yield was up early but flipped over to create a negative outside reversal day, and it closed below the December high potentially creating a failed breakout on the chart, but it will depend on if it can quickly bounce back or not. The rising channel is intact so the battle today will be between the 38.50 support, and resistance near 39.
With today being Friday and the final day for this week's candlestick to either hold or break below support. So far the pullback is staying within acceptable parameters as far as being 5% off the highs and remaining above that double layer of support near 3950 or so. The PCE and Income data today might be the determining factor.
The Dow Transportation Index was up over 1% yesterday but you can see it is in kind of a purgatory area between some support and some resistance. Over all the chart looks bullish but it really needs to get back above 14,750 to prove the recent decline was just a moderate pullback that didn't do any technical damage. A move below the 50-day EMA near 14,500 wouldn't be a disaster, but you would have expected the bulls to make a move to buy in that area. If they don't, then that would tell us something.
Like many investors, I am very worried about the "story", but again the charts are still holding up at this point, and the bulls still have a shot at keeping the intermediate term rally alive after this short term pullback.
The S&P 500 (C-fund) rallied enough to recapture the 50 and 200-day EMAs yesterday, while the 50-day simple average (orange) has been holding on a closing basis since the close below it on January 19. The positive reversal day yesterday looks familiar and more sideways consolidation action near the lows would also resemble some prior short-term lows. The one in November (blue) was less like a consolidation and more of a "V" low, although we did get one sell off after Election Day that reversed back up the following day.
DWCPF (S-fund) also had a positive reversal day and the lows conveniently were right at the 200-day EMA. There is that small open gap above 1760 and filling that could be all this rally wants to do, but it is a bull flag and another trip to the top of the flag is also very possible.
The EFA (I-fund) was up yesterday but it has been trending slightly lower for weeks now, making a nice bullish looking flag formation. The 69 area looks like decent support at this point. A move above 71 would likely bring in more buyers.
BND (bonds / F-fund) was up yesterday and we may be watching the right shoulder of a head and shoulders pattern forming. That could mean good things for bonds and stocks in the short-term, but maybe not so much once the right shoulder peaks.
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 so much 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.
