The market had a lot to deal with a lot on Tuesday from another very hot PPI economic report to some easing tensions on the Ukraine border and it turned out that the relief of a possible de-escalation of the conflict at the border won out. It was as if investors were looking for a reason to buy, and they got one, but the other problems persist, so can we trust the move? The Dow gained 423-points while the Nasdaq and small caps jumped over 2.5%.
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The S&P 500 (C-fund) moved sharply higher yesterday after the news out of Russia that there might be some easing tensions. I'm not too convinced, and with the 10-year yield still rising, the resistance on this chart could be a formidable opponent for the bulls. The 4550 area looks the toughest, while support at 400 has held.
The DWCPF (small caps / S-fund) exploded with a near 3% gain. A snap back rally isn't too much of a surprise on good news in a down market. What would be surprising is a move above that 2050. This is a broken down bear flag that is in a downtrend. Could it break out to the upside? Sure, anything can happen, especially during an options expiration week. But would that get the herd leaning the wrong way?
The EFA (I-fund) rallied and opened another gap along the way. It hit and stalled at the 200-day EMA, but not before adding a nice gain to the fund.
BND (Bonds / F-fund) made another closing low. Yields are trending higher, so bond prices continue to move lower. At some point we'll get a decent relief rally in bonds, but when?
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
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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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The overnight futures moved sharply higher at about 3 AM ET times after Russia announced that they were removing some troops from the border, and the markets saw that as a reason that the conflict may be cooling. In my mind, that doesn't sound like something that is feasible, unless Russia is blinking, but that's not usually how Putin works... but I have no idea and probably shouldn't speculate. It just didn't sound like it's over by any means. So does that mean the rally was unjustified?
Not exactly. Stocks were down hard for three straight days and there was a positive reversal on Monday, and a relief rally from there may have happened regardless, although maybe not to the degree that we saw. The charts may have gone up but the technical picture hasn't improved all that much as we see overhead resistance and bear flags on a few of the key charts.
Then we got the PPI Report that came in hotter than expected. Forecasts were looking for a 0.5% bump up in producer prices and instead they were up twice that at 1.0%. That was a year over year gain of 9.7%, which of course is a big move and a concern for inflation.
The 10-year Treasury reacted as you might expect after a report like that and it closed at its highest level of the year, which is the highest in a couple of years. The Ukraine news overshadowed that, but because of this I'm not so convinced that yesterday's rally in stocks will continue for too much longer, however it is options expiration week and we can see some unusual movement in stocks through Friday.
The dollar was down sharply yesterday filling in the small gap opened on Monday. It may be a stretch but that could be a large head and shoulders pattern on the UUP chart, which would be bearish for the dollar since they do tend to eventually break down.
As I mentioned above, it is options expiration week and we can see some exaggerated moves in either direction. Some key, high open interest strike prices for S&P 500 options are:
There could be a pull toward those higher volume strike prices, and in this case 4500 and 4470 will be big draws, as will the high volume on the put side near 4400 and 4450. Lets see if the S&P 500 closes between those on Friday - maybe somewhere near 4460? it closed yesterday at 4471.
Not exactly. Stocks were down hard for three straight days and there was a positive reversal on Monday, and a relief rally from there may have happened regardless, although maybe not to the degree that we saw. The charts may have gone up but the technical picture hasn't improved all that much as we see overhead resistance and bear flags on a few of the key charts.
Then we got the PPI Report that came in hotter than expected. Forecasts were looking for a 0.5% bump up in producer prices and instead they were up twice that at 1.0%. That was a year over year gain of 9.7%, which of course is a big move and a concern for inflation.
The 10-year Treasury reacted as you might expect after a report like that and it closed at its highest level of the year, which is the highest in a couple of years. The Ukraine news overshadowed that, but because of this I'm not so convinced that yesterday's rally in stocks will continue for too much longer, however it is options expiration week and we can see some unusual movement in stocks through Friday.
The dollar was down sharply yesterday filling in the small gap opened on Monday. It may be a stretch but that could be a large head and shoulders pattern on the UUP chart, which would be bearish for the dollar since they do tend to eventually break down.
As I mentioned above, it is options expiration week and we can see some exaggerated moves in either direction. Some key, high open interest strike prices for S&P 500 options are:
There could be a pull toward those higher volume strike prices, and in this case 4500 and 4470 will be big draws, as will the high volume on the put side near 4400 and 4450. Lets see if the S&P 500 closes between those on Friday - maybe somewhere near 4460? it closed yesterday at 4471.
The S&P 500 (C-fund) moved sharply higher yesterday after the news out of Russia that there might be some easing tensions. I'm not too convinced, and with the 10-year yield still rising, the resistance on this chart could be a formidable opponent for the bulls. The 4550 area looks the toughest, while support at 400 has held.
The DWCPF (small caps / S-fund) exploded with a near 3% gain. A snap back rally isn't too much of a surprise on good news in a down market. What would be surprising is a move above that 2050. This is a broken down bear flag that is in a downtrend. Could it break out to the upside? Sure, anything can happen, especially during an options expiration week. But would that get the herd leaning the wrong way?
The EFA (I-fund) rallied and opened another gap along the way. It hit and stalled at the 200-day EMA, but not before adding a nice gain to the fund.
BND (Bonds / F-fund) made another closing low. Yields are trending higher, so bond prices continue to move lower. At some point we'll get a decent relief rally in bonds, but when?
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.
