Stocks opened higher to start the new week but after a bout of morning selling, it turned into a flat to slightly negative day for stocks. The Dow was down 13-points after being up triple digits in early trading. A surging dollar held the I-fund back, and yields were on the move again and that put pressure on big tech although there was a little buying into the close to limit the damage.
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The S&P 500 (C-fund) remains near the all time highs despite some attempts at a pullback recently. The rising support line was broken last week, and you can see that there is a lot of resistance near the recent highs - but the lines are all rising. There is a lot of open air between the current level and the 50-day EMA, and of course the 200-day EMA which is about 440-points below yesterday's close. The 50-day EMA is 150-points below the current level. That's pretty extended.
The DWCPF (S-fund) was down but it still managed a higher high, and a higher low above Friday's candlestick. I mention that because the Russell 2000 small caps index did not do that. It (below the dwcpf) had created a negative outside reversal day and a bear flag, so the S-fund may be in a little trouble if the Russell 2000 does what negative outside reversals and bear flags are supposed to do -- go down.
The EFA (I-fund) is holding up well considering the recent strength in the dollar. Yes, it is lagging the S&P 500 this month, but not by much. So I see this as decent strength -- IF the dollar pulls back. If the dollar is going to continue to barrel higher, I'd be avoiding the I-fund.
BND (Bonds / F-fund) was down sharply as yields are rising again. It is below several levels of support, including the 200-day EMA so technically, the only plus here may be that it is a lot lower than it was a week ago, so if you were looking to buy bonds, you are getting a better price. The question is whether the low prices make it a bargain, or a dead money?
The Dow Transportation Index chart has been a little messy since AVIS caused that surge earlier this month. Despite closing well off the high on the day of the peak, it has settled down and held up fairly well since the close on November 2nd, but it has been rising above some key support for the last week. A break below support could mean a drop back to the 16,000 area.
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 market seems to be getting ready for a change. With inflationary data becoming more apparent, we're seeing yields move back up, and the Fed must be discussing tightening interest rates at this point with the employment data improving last month. The yield on the 10-year jumped again and it is back over 1.6% and now trending higher after the recent breakout above the descending channel.
The dollar is also reacting to rising yields and the pickup in economic data, and that put some pressure on the likely victims yesterday such gold, silver, and copper, but oil came back from a sharp morning loss to close positive.
The internal numbers were mixed with the declining issues outpacing advancing by a modest margin, while share volume was positive on the NYSE, and negative on the Nasdaq, and as I said, the strength in yields was likely a factor for the Nasdaq. We did see 206 new 52-week highs on the Nasdaq, which is meaningful, but also 133 new lows which is also on the high side.
We got a minor pause in stocks over the last week and that could be because of how stretched the charts are to the upside. The S&P 500 is still within 1% of an all time high so we can hardly call this a meaningful pullback yet. However, the closer we get to the holidays, the less the bears tend to get aggressive which gives stocks a bullish bias into the end of the year. There are some years when that isn't the case, and sometimes that is because investors were reluctant to sell into mid-November, so maybe there will be a surprise correction between now and the end of the year. But other than extended charts, I'm not sure what might trigger that, although the recent rally in the dollar may turn out to be troublesome for prices in general.
We'll get some retail numbers this week, which could be a market mover in this environment. With oil and gas prices getting quite high, it will be interesting to see if consumers are still opening up their wallets at the stores. I know some of the department store stocks have been doing quite well in recent months.
The dollar is also reacting to rising yields and the pickup in economic data, and that put some pressure on the likely victims yesterday such gold, silver, and copper, but oil came back from a sharp morning loss to close positive.
The internal numbers were mixed with the declining issues outpacing advancing by a modest margin, while share volume was positive on the NYSE, and negative on the Nasdaq, and as I said, the strength in yields was likely a factor for the Nasdaq. We did see 206 new 52-week highs on the Nasdaq, which is meaningful, but also 133 new lows which is also on the high side.
We got a minor pause in stocks over the last week and that could be because of how stretched the charts are to the upside. The S&P 500 is still within 1% of an all time high so we can hardly call this a meaningful pullback yet. However, the closer we get to the holidays, the less the bears tend to get aggressive which gives stocks a bullish bias into the end of the year. There are some years when that isn't the case, and sometimes that is because investors were reluctant to sell into mid-November, so maybe there will be a surprise correction between now and the end of the year. But other than extended charts, I'm not sure what might trigger that, although the recent rally in the dollar may turn out to be troublesome for prices in general.
We'll get some retail numbers this week, which could be a market mover in this environment. With oil and gas prices getting quite high, it will be interesting to see if consumers are still opening up their wallets at the stores. I know some of the department store stocks have been doing quite well in recent months.
The S&P 500 (C-fund) remains near the all time highs despite some attempts at a pullback recently. The rising support line was broken last week, and you can see that there is a lot of resistance near the recent highs - but the lines are all rising. There is a lot of open air between the current level and the 50-day EMA, and of course the 200-day EMA which is about 440-points below yesterday's close. The 50-day EMA is 150-points below the current level. That's pretty extended.
The DWCPF (S-fund) was down but it still managed a higher high, and a higher low above Friday's candlestick. I mention that because the Russell 2000 small caps index did not do that. It (below the dwcpf) had created a negative outside reversal day and a bear flag, so the S-fund may be in a little trouble if the Russell 2000 does what negative outside reversals and bear flags are supposed to do -- go down.
The EFA (I-fund) is holding up well considering the recent strength in the dollar. Yes, it is lagging the S&P 500 this month, but not by much. So I see this as decent strength -- IF the dollar pulls back. If the dollar is going to continue to barrel higher, I'd be avoiding the I-fund.
BND (Bonds / F-fund) was down sharply as yields are rising again. It is below several levels of support, including the 200-day EMA so technically, the only plus here may be that it is a lot lower than it was a week ago, so if you were looking to buy bonds, you are getting a better price. The question is whether the low prices make it a bargain, or a dead money?
The Dow Transportation Index chart has been a little messy since AVIS caused that surge earlier this month. Despite closing well off the high on the day of the peak, it has settled down and held up fairly well since the close on November 2nd, but it has been rising above some key support for the last week. A break below support could mean a drop back to the 16,000 area.
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Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
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.
