Small caps lagged but otherwise it was a nice follow-through upside day for stocks after Friday's rally, and Thursday's positive reversal day. The Dow gained 126-points, falling just 4 point short of 35,000. The gains were modest but the bulls didn't back off. There are some concerns still out there and next week, as earnings start coming in, those concerns could turn into profit taking if there are any disappointments.
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This is a big week for bank earnings and there are big expectations, although the plummeting 10-year Treasury has not helped them recently, so the move higher in the 10-year yield in the last couple of days did help financial stocks rise, but what will earnings be like? This chart could go two ways - bear flag or double bottom?
Here's the move in the 10-year as it has climbed back above its 200-day EMA after a couple of days below it. Is this finally a bottoming out in yields? Not many people thought we'd be seeing 1.3% so that may have been the capitulation low after it fell through that 200-day EMA. Should the 200-day EMA hold as support going forward, it would be a bad sign for the F-fund.
The dollar was up again as the 200-day average did hold as support for at least another day. This put a little pressure on commodities such as gold, copper, and oil. Oh, and lumber was down another 6.6% yesterday to close at a 6 month low.
Back on March 23 of 2020, the S&P 500 hit a low of 2192. Yesterday's close of 4385 now makes it a full double, or 100% gain since that time. This could have some significance, although only to those paying attention, obviously.
You know how those self-fulfilling prophesies are in the market go? If everyone sees a support or resistance line, there could me a mass reaction, only because it's there. Is this 100% thing meaningful? We should know soon enough.
The S&P 500 (C-fund) made yet another new high on Monday so the positive reversal and rally late last week got some decent follow-through. It actually broke above that red resistance line making it a little cringe-worthy as it continues to get stretched. Thursday's selling wasn't much of a pullback, but it brought the dip buyers out. That PMO indicator is rising, which is good, but that negative divergence (blue arrows) is still sitting out there as a warning sign.
The DWCPF (S-fund) was down slightly but after the near 2% gain on Friday, a little digesting wasn't terrible, and it did come from well off its morning lows. I'm watching that blue head and shoulders pattern to see if a right shoulder is going to form, or if it will continue up to test the head. You can see yesterday's high was at some key resistance (red line).
The EFA / I-fund had a nice day despite a gain in the dollar. We saw a technical breakout yesterday after a major positive reversal late last week. There's a small open gap near 80.50, but a large one down by 78.50.
The Dow Transportation Index was down slightly and this one still looks suspect with that bear flag sitting there. This could just be a retest of the bottom of that flag so it needs to get back above that 14,800 area, and preferably the 50-day EMA near 15,000.
The BND (bonds / F-fund) was down slightly and holding at that key support line, which had been the resistance line until last week's breakout. The strength here has been the surprise as yields fell much lower than many expected, so the surprise outcome here again might be seeing that support line hold.
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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This is a big week for bank earnings and there are big expectations, although the plummeting 10-year Treasury has not helped them recently, so the move higher in the 10-year yield in the last couple of days did help financial stocks rise, but what will earnings be like? This chart could go two ways - bear flag or double bottom?
Here's the move in the 10-year as it has climbed back above its 200-day EMA after a couple of days below it. Is this finally a bottoming out in yields? Not many people thought we'd be seeing 1.3% so that may have been the capitulation low after it fell through that 200-day EMA. Should the 200-day EMA hold as support going forward, it would be a bad sign for the F-fund.
The dollar was up again as the 200-day average did hold as support for at least another day. This put a little pressure on commodities such as gold, copper, and oil. Oh, and lumber was down another 6.6% yesterday to close at a 6 month low.
Back on March 23 of 2020, the S&P 500 hit a low of 2192. Yesterday's close of 4385 now makes it a full double, or 100% gain since that time. This could have some significance, although only to those paying attention, obviously.
You know how those self-fulfilling prophesies are in the market go? If everyone sees a support or resistance line, there could me a mass reaction, only because it's there. Is this 100% thing meaningful? We should know soon enough.
The S&P 500 (C-fund) made yet another new high on Monday so the positive reversal and rally late last week got some decent follow-through. It actually broke above that red resistance line making it a little cringe-worthy as it continues to get stretched. Thursday's selling wasn't much of a pullback, but it brought the dip buyers out. That PMO indicator is rising, which is good, but that negative divergence (blue arrows) is still sitting out there as a warning sign.
The DWCPF (S-fund) was down slightly but after the near 2% gain on Friday, a little digesting wasn't terrible, and it did come from well off its morning lows. I'm watching that blue head and shoulders pattern to see if a right shoulder is going to form, or if it will continue up to test the head. You can see yesterday's high was at some key resistance (red line).
The EFA / I-fund had a nice day despite a gain in the dollar. We saw a technical breakout yesterday after a major positive reversal late last week. There's a small open gap near 80.50, but a large one down by 78.50.
The Dow Transportation Index was down slightly and this one still looks suspect with that bear flag sitting there. This could just be a retest of the bottom of that flag so it needs to get back above that 14,800 area, and preferably the 50-day EMA near 15,000.
The BND (bonds / F-fund) was down slightly and holding at that key support line, which had been the resistance line until last week's breakout. The strength here has been the surprise as yields fell much lower than many expected, so the surprise outcome here again might be seeing that support line hold.
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.
