Stocks were mixed yesterday and it felt like a little bit of a digestion of the two-day rally given that the gains were minimal yesterday and the Nasdaq tumbling late to close in the red. As you'll see below, the small gains in the indices were actually not a good indication of how strong the market was internally. The I-fund and small caps led on the upside, while bonds were down again, as was the dollar.
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The frenzy in the short-squeeze stocks died down a bit yesterday, but that could always come back into play if there is another coordinated wave of buying from those Reddit traders.
Internally the numbers were positive, especially in the Nasdaq. So why did the Nasdaq end the day down a couple of points on the day? Amazon and Apple were down and the index is heavily weighted with those big techs that end up being the major catalysts, so their losses were kind of a smoke screen from the actual strength we saw in the index. Trading volume in the Nasdaq was 4 to 1 in favors of advancers.
By the way, after the bell last evening there was some news released about Apple and Hyundai working on some kind of vehicle, and the stock was up modestly in after hours trading, so we'll see what that does to the Nasdaq today. And of course Apple is a Dow and S&P 500 component as well, so the entire market is impacted. The overnight futures opened to the upside.
Tomorrow (Friday) we'll get the January Jobs Report, and that's always a potential market mover. The estimates are looking for a gain of about 50,000 jobs, and an unemployment rate of 6.7%. If you recall, we lost 140,000 jobs in the prior report and stocks rallied that day, but drifted sideways to slightly lower for about a week afterward.
The S&P 500 (C-fund) posted a small gain yesterday following the big two-day rally on Monday and Tuesday. The pullback in late January ended when the 50-day EMA was successfully tested so the technical picture has been classic bull market action. At this point new highs are a must or we could see some calls for a top, but it's premature to talk about that. Just keep it in mind.
The DWCPF (small caps / S-fund) led on the upside yesterday despite a slow start to the day for the small caps, which were in the red in early trading on Wednesday. The repeating pattern for this rising trend continues, and as I said above, a new high is the only acceptable outcome in the coming days. If we do get a new high, then we might expect a few days on sideways consolidation like we saw after prior breakouts.
The EFA (I-fund) was up but it is still trading below some recently broken support so there are some obstacles here. The dollar has been rallying and that has caused the I-fund to lag a bit, but it wouldn't take much to see that dollar roll back over, and the I-fund would be back in business. The 50-day EMA holding is classic bull market action, as we said above.
The Dow Jones Transportation Index was flat but that means it didn't give back any of the 400-points that it made in the prior two days of trading. It also closed back above the 50-day EMA for a second straight day, after closing below it for four straight days. I often talk about a 3 - 5 day rule before confirming a breakout or breakdown. That pullback was testing the limits. Now let's see if it can hold for 5 days above it again.
The Volatility Index dropped yet again - another 10.4%. That's now two closes below the 200-day EMA but it is also testing some interesting support that has held for two months.
BND (bonds / F-fund) has fallen out of a bear flag for almost a week now, and still no fills on the open gaps above or below, although the one near 87 was partially filled yesterday and it may get the job done today on any negative prints. The bottom of the open gap could act as support, but a test of the lows is a very good possibility as well with that bear flag breakdown target being near 86.00.
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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The frenzy in the short-squeeze stocks died down a bit yesterday, but that could always come back into play if there is another coordinated wave of buying from those Reddit traders.
Internally the numbers were positive, especially in the Nasdaq. So why did the Nasdaq end the day down a couple of points on the day? Amazon and Apple were down and the index is heavily weighted with those big techs that end up being the major catalysts, so their losses were kind of a smoke screen from the actual strength we saw in the index. Trading volume in the Nasdaq was 4 to 1 in favors of advancers.
By the way, after the bell last evening there was some news released about Apple and Hyundai working on some kind of vehicle, and the stock was up modestly in after hours trading, so we'll see what that does to the Nasdaq today. And of course Apple is a Dow and S&P 500 component as well, so the entire market is impacted. The overnight futures opened to the upside.
Tomorrow (Friday) we'll get the January Jobs Report, and that's always a potential market mover. The estimates are looking for a gain of about 50,000 jobs, and an unemployment rate of 6.7%. If you recall, we lost 140,000 jobs in the prior report and stocks rallied that day, but drifted sideways to slightly lower for about a week afterward.
The S&P 500 (C-fund) posted a small gain yesterday following the big two-day rally on Monday and Tuesday. The pullback in late January ended when the 50-day EMA was successfully tested so the technical picture has been classic bull market action. At this point new highs are a must or we could see some calls for a top, but it's premature to talk about that. Just keep it in mind.
The DWCPF (small caps / S-fund) led on the upside yesterday despite a slow start to the day for the small caps, which were in the red in early trading on Wednesday. The repeating pattern for this rising trend continues, and as I said above, a new high is the only acceptable outcome in the coming days. If we do get a new high, then we might expect a few days on sideways consolidation like we saw after prior breakouts.
The EFA (I-fund) was up but it is still trading below some recently broken support so there are some obstacles here. The dollar has been rallying and that has caused the I-fund to lag a bit, but it wouldn't take much to see that dollar roll back over, and the I-fund would be back in business. The 50-day EMA holding is classic bull market action, as we said above.
The Dow Jones Transportation Index was flat but that means it didn't give back any of the 400-points that it made in the prior two days of trading. It also closed back above the 50-day EMA for a second straight day, after closing below it for four straight days. I often talk about a 3 - 5 day rule before confirming a breakout or breakdown. That pullback was testing the limits. Now let's see if it can hold for 5 days above it again.
The Volatility Index dropped yet again - another 10.4%. That's now two closes below the 200-day EMA but it is also testing some interesting support that has held for two months.
BND (bonds / F-fund) has fallen out of a bear flag for almost a week now, and still no fills on the open gaps above or below, although the one near 87 was partially filled yesterday and it may get the job done today on any negative prints. The bottom of the open gap could act as support, but a test of the lows is a very good possibility as well with that bear flag breakdown target being near 86.00.
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.
