Stocks tumbled out of the gate on Tuesday, and while the dip buyers did eventually show up, they were later than we've seen lately, and the indices closed down sharply rather than gain back all of their losses as we have been seeing. The Dow lost 282, off the lows as you can see the "V" formations once again on the intraday charts below. Oil and other commodities were down as the dollar rallied, and yields were up / bond prices down.
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Some economic weakness out of China including a decline in their tech stocks got the market off to a rough start on Tuesday, and then the U.S. retail sales numbers came in weaker than expected triggering a sell off and breakdown on the RLX retail sector index. This had already broken down from longer term support back in July, but yesterday's move was an exclamation and perhaps confirmation of retail weakness.
The internals were weak across the board including decliners leading advancing issues by almost 3 to 1 on the NYSE. The Nasdaq saw another 340 new 52-week lows as another Hindenburg Omen warning was triggered this week.
The dollar had a big day rallying 0.60% putting pressure on the I-fund, and commodity prices.
Crude oil fell 1% and remains in a downtrend off the July 6 highs, and the price of copper fell nearly 3% yesterday and has a lot of issues on its chart with that head and shoulders pattern in a downtrend, which usually doesn't end well.
The price of lumber, which saw a high of 1700 earlier this year, has now fallen below 500 to 456. Quite a move.
So there's some trouble out there and the S&P 500 is one day off an all time high. Can it keep rolling along, and if so, why? We've seen small caps lag badly and the question is whether small caps catch up to the S&P, or if the S&P is going to go the way of the small caps.
The S&P 500 (C-fund) didn't make a new high yesterday, but the dip buyers didn't want to wait a full day to do their buying and the index again closed well off the lows as the 20-day EMA held once again. Almost every time that 20 day average was tested, held, and rebounded, the following day was a good day. But how long can this trend go on? Don't investors know this is August, the worst month of the year historically, and we're supposed to pull back? I guess they didn't get the memo. I suspect the 50-day EMA will be tested in August or September, but this market has fooled me on the upside quite often, so I'm not holding my breadth.
The DWCPF (S-fund) was down over 1% on the day, and that's after it gained back much of its intraday lows to create a positive reversal formation. There was some support near 2175, but the technical picture is getting a little more questionable as a head and shoulders pattern forms. A convenient pullback area would be 2150 where it would satisfy a few technical targets.
The EFA (EAFE Index / I-fund) posted a big loss with the dollar up and the double top pullback working as we'd expected. There's some possible support at 79.70 and the dollar is now up against some resistance so we may be close to some kind of short term low here - unless U.S. stocks continued struggle.
The Dow Transportation Index pulled back 1% but closed above the 100 and 50 day averages again, after closing well off its lows. There hasn't been a lot of dip buying in the Transports over the last few months, but it seems to be changing lately, so this is another possible good sign.
The BND (bonds / F-fund) was down yesterday and unlike on Monday, this time it backed off from the old trading channel's resistance line so it appears stuck between that and the 50-day EMA right now.
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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Some economic weakness out of China including a decline in their tech stocks got the market off to a rough start on Tuesday, and then the U.S. retail sales numbers came in weaker than expected triggering a sell off and breakdown on the RLX retail sector index. This had already broken down from longer term support back in July, but yesterday's move was an exclamation and perhaps confirmation of retail weakness.
The internals were weak across the board including decliners leading advancing issues by almost 3 to 1 on the NYSE. The Nasdaq saw another 340 new 52-week lows as another Hindenburg Omen warning was triggered this week.
The dollar had a big day rallying 0.60% putting pressure on the I-fund, and commodity prices.
Crude oil fell 1% and remains in a downtrend off the July 6 highs, and the price of copper fell nearly 3% yesterday and has a lot of issues on its chart with that head and shoulders pattern in a downtrend, which usually doesn't end well.
The price of lumber, which saw a high of 1700 earlier this year, has now fallen below 500 to 456. Quite a move.
So there's some trouble out there and the S&P 500 is one day off an all time high. Can it keep rolling along, and if so, why? We've seen small caps lag badly and the question is whether small caps catch up to the S&P, or if the S&P is going to go the way of the small caps.
The S&P 500 (C-fund) didn't make a new high yesterday, but the dip buyers didn't want to wait a full day to do their buying and the index again closed well off the lows as the 20-day EMA held once again. Almost every time that 20 day average was tested, held, and rebounded, the following day was a good day. But how long can this trend go on? Don't investors know this is August, the worst month of the year historically, and we're supposed to pull back? I guess they didn't get the memo. I suspect the 50-day EMA will be tested in August or September, but this market has fooled me on the upside quite often, so I'm not holding my breadth.
The DWCPF (S-fund) was down over 1% on the day, and that's after it gained back much of its intraday lows to create a positive reversal formation. There was some support near 2175, but the technical picture is getting a little more questionable as a head and shoulders pattern forms. A convenient pullback area would be 2150 where it would satisfy a few technical targets.
The EFA (EAFE Index / I-fund) posted a big loss with the dollar up and the double top pullback working as we'd expected. There's some possible support at 79.70 and the dollar is now up against some resistance so we may be close to some kind of short term low here - unless U.S. stocks continued struggle.
The Dow Transportation Index pulled back 1% but closed above the 100 and 50 day averages again, after closing well off its lows. There hasn't been a lot of dip buying in the Transports over the last few months, but it seems to be changing lately, so this is another possible good sign.
The BND (bonds / F-fund) was down yesterday and unlike on Monday, this time it backed off from the old trading channel's resistance line so it appears stuck between that and the 50-day EMA right now.
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.
