Stocks started the 2nd week of February pretty much the way it started its first week, and the short-squeeze pullback in late January is now a distant memory. The Dow gained 238-points and - wash, rinse, repeat - the small caps and the Nasdaq led on the upside. The dollar was down slightly, holding onto support, and bonds were up.
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One of the bigger stories of the day yesterday was seeing bitcoin jump over $6000 to $45,000 a coin, adding to this asset bubble situation, but I'm not sure how to conflate the rise in bitcoin at the same time that stocks are flying unless we surmise that investors are just looking for risk and want to be in whatever if moving the most.
Tesla, one of the high flyer stocks over the last year, used 8% of their cash reserves to buy $1.5 billion in bitcoin yesterday. To put that in perspective, that is how much they put into research and development last year for their own company, so this is a big bet for them.
But is it is bet on crypto, a bet against the dollar, just an alternative for their large cash position, a speculation trade, or is it just a sign of the times? Many thought the run up in 2017 in bitcoin was a mania. Look where it is now...
Of course stocks did pretty well too yesterday with investors in full buy mode, I am getting a little worried about the euphoric feeling that may be brewing.
There was a guy Jonathan Gulob on Fast Money last night. To summarizing his point, he was saying that he doesn't see anything that can really stop this market economic growth, and he is not concerned about the current high valuations of stocks.
I don't know. That sounds like what people say near a market top, no? You certainly don't hear that at bear market lows.
The S&P 500 (C-fund) has had a great run since the late January pullback, but it is now pushing the top end of that rising trading channel. There's no rule that says it has to stop there, or that it can't ride up below that support line, but clearly the risk reward may be a little riskier in this area than it was a week ago.
The DWCPF (small caps / S-fund) just keeps moving up in chunks, and again we have a chart testing the upper end of its rising channel. Rallies like this don't usually reverse on a dime, but it could consolidate for a few days if the resistance holds.
The EFA (I-fund) was up and the dollar slightly lower, and the dollar is now sitting on top of that 50-day EMA - an interesting juncture which could determine if the EFA is heading to new highs or not. I would think that the UUP would have to go below the 50-EMA to see the EFA breakout.
The Dow Transportation Index is at the top of the right side of a "potential" head and shoulders pattern. This is the area where it may start to struggle if this turns out to be an H&S.
The HYG High Yield Corporate Bond Yield ETF blasted through resistance and to new highs yesterday, so it's a good reason to see stocks making new highs as well. Does this mean the other stock charts will also move through their resistance that I noted above?
BND (bonds / F-fund) was up but remains in a downtrend. Meanwhile the yield on the 10-year Treasury (below) may have hit a double top, which may help bonds break that descending resistance - if that January peak in yield holds.
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
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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One of the bigger stories of the day yesterday was seeing bitcoin jump over $6000 to $45,000 a coin, adding to this asset bubble situation, but I'm not sure how to conflate the rise in bitcoin at the same time that stocks are flying unless we surmise that investors are just looking for risk and want to be in whatever if moving the most.
Tesla, one of the high flyer stocks over the last year, used 8% of their cash reserves to buy $1.5 billion in bitcoin yesterday. To put that in perspective, that is how much they put into research and development last year for their own company, so this is a big bet for them.
But is it is bet on crypto, a bet against the dollar, just an alternative for their large cash position, a speculation trade, or is it just a sign of the times? Many thought the run up in 2017 in bitcoin was a mania. Look where it is now...
Of course stocks did pretty well too yesterday with investors in full buy mode, I am getting a little worried about the euphoric feeling that may be brewing.
There was a guy Jonathan Gulob on Fast Money last night. To summarizing his point, he was saying that he doesn't see anything that can really stop this market economic growth, and he is not concerned about the current high valuations of stocks.
I don't know. That sounds like what people say near a market top, no? You certainly don't hear that at bear market lows.
The S&P 500 (C-fund) has had a great run since the late January pullback, but it is now pushing the top end of that rising trading channel. There's no rule that says it has to stop there, or that it can't ride up below that support line, but clearly the risk reward may be a little riskier in this area than it was a week ago.
The DWCPF (small caps / S-fund) just keeps moving up in chunks, and again we have a chart testing the upper end of its rising channel. Rallies like this don't usually reverse on a dime, but it could consolidate for a few days if the resistance holds.
The EFA (I-fund) was up and the dollar slightly lower, and the dollar is now sitting on top of that 50-day EMA - an interesting juncture which could determine if the EFA is heading to new highs or not. I would think that the UUP would have to go below the 50-EMA to see the EFA breakout.
The Dow Transportation Index is at the top of the right side of a "potential" head and shoulders pattern. This is the area where it may start to struggle if this turns out to be an H&S.
The HYG High Yield Corporate Bond Yield ETF blasted through resistance and to new highs yesterday, so it's a good reason to see stocks making new highs as well. Does this mean the other stock charts will also move through their resistance that I noted above?
BND (bonds / F-fund) was up but remains in a downtrend. Meanwhile the yield on the 10-year Treasury (below) may have hit a double top, which may help bonds break that descending resistance - if that January peak in yield holds.
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
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.
