Stocks opened higher on Monday morning and there was some piling on until about lunchtime when the Atlanta Fed President, Raphael Bostic, spoke about interest rates, and the air started to come out of the rally. The Dow ended the day down 113-points but the results were mixed with the Nasdaq, Transportation Index, small caps, and the I-fund all able to hold onto solid gains, although off their highs. The S&P 500 was was basically flat after being up well over 1% in early trading. Bonds were up and the dollar was down.
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As I feared and talked about in Monday's commentary, the first of the Fedspeak came from Raphael Bostic yesterday saying the central back should raise interest rates above 5% by the second quarter and then go on hold for “a long time." "We are just going to have to hold our resolve", and “I am not a pivot guy. I think we should pause and hold there, and let the policy work."
So that's strike one and what this market is up against, and we saw the results of that yesterday as the strong morning rally faded.
Chairman Jerome Powell will speak on Tuesday before the opening bell, which is this week's highlight of the Fed speak, so we could get some kind of a gap opening today. Here's the schedule for the rest of the week.
As far as yesterday's action goes, the negative reversals left a mark on the charts, but internally it really wasn't bad at all. Advancers easily outpaced the decliners and trading volume was more than 2 to 1 in favor of the advancers. We also saw 10 to 1 new highs to new lows on the NYSE.
The catalyst to the early rally was the spillover from Friday's rally in stocks which also saw the dollar and yields fall and that continued into Monday. So while the negative reversal on the stock charts may scare out the technicians, and I put a lot of stock in the charts - no pun intended, the fundamentals for that rally remained intact. That could change quickly, but it hasn't yet.
The dollar did find support at the old lows and the BND bond chart (F-fund) stalled near resistance, so there is that, and we'll just have to see if it continues to hold the deeper we get into the week.
As TSP Talk Plus subscribers know, we were looking for some kind of rally early this year and after Friday's big gains and the strong start to Monday's trading, I got a little nervous and pulled some off the table, but to be honest, I could go either way. I just wanted to lock in some gains - something that wasn't easy to do in 2022.
This week may go on like this with some buying coming in here and there, then a comment or two from one of the Fed members could slam things back down, or bolster it, depending on what they say, and then we get the CPI on Thursday which could be a major catalyst for the week.
This year could be similar to 2022 in that we may have to take some gains when we can, and not when we have to, or fail to. The bear is still here officially, but the bear market rallies can still throw us a bone here and there.
Admin note: We are offering a 25% off annual subscriptions sale to TSP Talk Plus and RevShark's TSP Timing all this week. Whether you are new, or already subscriber, you can add another full year for 25% off the regular price. As I mentioned last week, Intrepid Timer's service will not be participating in the sale. The Last Look Report is already priced as low as we can go to keep it going, although it does have a 50% multi-service discount. More information
The S&P 500 (C-fund) had quite a day when looking at the technical picture on the chart. A breakout above that bearish looking flag, a failure and close back within it. However it did close above the 50-day EMA for a second straight day while hanging around that important 3900 level.
The morning rally also test the bottom of that small open gap before failing, rather than filling it first. So that's some mixed signals. The bears may feel that they had a victory but the bulls may make another stand, but of course Jay Powell speaks at 9 AM ET, before the opening bell, which means we could see a gap open in one direction or the other at 9:30, depending on his message.
The DWCPF (S-fund) was up but faded with everything else, and now has a good news, bad news set up. The negative reversal day yesterday is usually a bearish sign for at least the short term, but the fact that it closed above the old resistance line and the 50-day EMA could help bring in some buyers today. A move back blow that resistance and the bears could start growling again.
The EFA / I-fund made a higher high intraday yesterday but faded with the US stocks. There's a double top issue here as well as another rising support line that may now be resistance. The 50-day EMA ticked above its 200-day EMA. That's usually a good intermediate term sign, assuming it holds, but in the short term it could be a sign of fatigue. It has been the relative strength leader of the TSP funds for months 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 so much 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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As I feared and talked about in Monday's commentary, the first of the Fedspeak came from Raphael Bostic yesterday saying the central back should raise interest rates above 5% by the second quarter and then go on hold for “a long time." "We are just going to have to hold our resolve", and “I am not a pivot guy. I think we should pause and hold there, and let the policy work."
So that's strike one and what this market is up against, and we saw the results of that yesterday as the strong morning rally faded.
Chairman Jerome Powell will speak on Tuesday before the opening bell, which is this week's highlight of the Fed speak, so we could get some kind of a gap opening today. Here's the schedule for the rest of the week.
As far as yesterday's action goes, the negative reversals left a mark on the charts, but internally it really wasn't bad at all. Advancers easily outpaced the decliners and trading volume was more than 2 to 1 in favor of the advancers. We also saw 10 to 1 new highs to new lows on the NYSE.
The catalyst to the early rally was the spillover from Friday's rally in stocks which also saw the dollar and yields fall and that continued into Monday. So while the negative reversal on the stock charts may scare out the technicians, and I put a lot of stock in the charts - no pun intended, the fundamentals for that rally remained intact. That could change quickly, but it hasn't yet.
The dollar did find support at the old lows and the BND bond chart (F-fund) stalled near resistance, so there is that, and we'll just have to see if it continues to hold the deeper we get into the week.
As TSP Talk Plus subscribers know, we were looking for some kind of rally early this year and after Friday's big gains and the strong start to Monday's trading, I got a little nervous and pulled some off the table, but to be honest, I could go either way. I just wanted to lock in some gains - something that wasn't easy to do in 2022.
This week may go on like this with some buying coming in here and there, then a comment or two from one of the Fed members could slam things back down, or bolster it, depending on what they say, and then we get the CPI on Thursday which could be a major catalyst for the week.
This year could be similar to 2022 in that we may have to take some gains when we can, and not when we have to, or fail to. The bear is still here officially, but the bear market rallies can still throw us a bone here and there.
Admin note: We are offering a 25% off annual subscriptions sale to TSP Talk Plus and RevShark's TSP Timing all this week. Whether you are new, or already subscriber, you can add another full year for 25% off the regular price. As I mentioned last week, Intrepid Timer's service will not be participating in the sale. The Last Look Report is already priced as low as we can go to keep it going, although it does have a 50% multi-service discount. More information
 | 25% Off Annual Premium Subscriptions!* Ends COB Friday... Click Here For More Information * For new or current subscribers |
The S&P 500 (C-fund) had quite a day when looking at the technical picture on the chart. A breakout above that bearish looking flag, a failure and close back within it. However it did close above the 50-day EMA for a second straight day while hanging around that important 3900 level.
The morning rally also test the bottom of that small open gap before failing, rather than filling it first. So that's some mixed signals. The bears may feel that they had a victory but the bulls may make another stand, but of course Jay Powell speaks at 9 AM ET, before the opening bell, which means we could see a gap open in one direction or the other at 9:30, depending on his message.
The DWCPF (S-fund) was up but faded with everything else, and now has a good news, bad news set up. The negative reversal day yesterday is usually a bearish sign for at least the short term, but the fact that it closed above the old resistance line and the 50-day EMA could help bring in some buyers today. A move back blow that resistance and the bears could start growling again.
The EFA / I-fund made a higher high intraday yesterday but faded with the US stocks. There's a double top issue here as well as another rising support line that may now be resistance. The 50-day EMA ticked above its 200-day EMA. That's usually a good intermediate term sign, assuming it holds, but in the short term it could be a sign of fatigue. It has been the relative strength leader of the TSP funds for months 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 so much 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.
