Stocks came roaring out of the gate on Tuesday, following through on the big reversal day on Monday, after several positive developments for the financial world. The Dow gained 527-points, but we did see some afternoon selling to take most of the indices well off their early morning highs. Yields rallied on strong economic data, so bonds were down.
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There were bullish news stories for the stock market yesterday, helping the indices to a 3rd consecutive day of gains after last Thursday's brutal sell-off. An infrastructure plan and stimulus were being discussed, while successful clinical trials of Dexamethasone have scientists excited about a possible breakthrough in cutting coronavirus death rates dramatically.
Retail sales blew estimates out of the water for May, coming in at +17.7%. Economists had predicted a gain of less than 8%. The retail sector has been exploding, far surpassing even the February pre-coronavirus highs. And while the action looks very favorable, there is some resistance overhead that may try to contain this index in this area. It feels like it has come too far under these economic circumstances, but if it can get past the 2950 area again, any serious resistance would be in the rearview mirror.
We've seen a giant rebound off of that ugly Monday morning low; about 200 S&P 500 points and almost 1800 Dow points from Monday's low to Tuesday's high. It's no wonder we saw a little steam come out of the rally on Tuesday afternoon. There were plenty of short-term profits for traders to take.
One of the reasons that we saw that may have been the filling of some of the open gaps from last Thursday's sell-off. In the XLF Financial sector ETF we can see that the high yesterday filled that gap and it backed off fairly significantly soon after.
That could be troublesome going forward because we know that open gaps tend to be a lure, and once filled the lure is gone, and in the case of the XLF, the only open gaps now are on the downside.
The S&P 500 (C-fund) gapped up sharply on Tuesday, backed off and filled the open gaps fairly quickly, then came back to close with a big gain, although off the highs. The gap here did not quite get filled like we saw in some of the other charts, so I wouldn't be surprised if that happened today, but I'm a little concerned about it getting past there. The 50 and 200-day EMAs were rocks on the pullback last week and into Monday, and that is a good sign.
The DWCPF (S-fund) gained almost 2% on the day and again, backed off from the highs after filling the gap. Perhaps it just needed a rest after the big two day move.
The EFA (I-fund) rallied and stalled at the 200-day SMA which happens to be in its open gap. 62 - 63 may be a challenge here, but if it can get passed that area, it would be a pretty good green light.
The Dow Transportation Index also stalled at an area that could be concerning. The top of the gap was hit, and that coincides with the top of the rising trading channel and the 200-day EMA. It made it through once, but clearly that 9500 is going to be a crucial pivot point here.
The BND (F-fund) rallied early but backed off later, and with yields jumping early yesterday on the retail sales numbers, the F-fund was bound for a loss yesterday.
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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There were bullish news stories for the stock market yesterday, helping the indices to a 3rd consecutive day of gains after last Thursday's brutal sell-off. An infrastructure plan and stimulus were being discussed, while successful clinical trials of Dexamethasone have scientists excited about a possible breakthrough in cutting coronavirus death rates dramatically.
Retail sales blew estimates out of the water for May, coming in at +17.7%. Economists had predicted a gain of less than 8%. The retail sector has been exploding, far surpassing even the February pre-coronavirus highs. And while the action looks very favorable, there is some resistance overhead that may try to contain this index in this area. It feels like it has come too far under these economic circumstances, but if it can get past the 2950 area again, any serious resistance would be in the rearview mirror.
We've seen a giant rebound off of that ugly Monday morning low; about 200 S&P 500 points and almost 1800 Dow points from Monday's low to Tuesday's high. It's no wonder we saw a little steam come out of the rally on Tuesday afternoon. There were plenty of short-term profits for traders to take.
One of the reasons that we saw that may have been the filling of some of the open gaps from last Thursday's sell-off. In the XLF Financial sector ETF we can see that the high yesterday filled that gap and it backed off fairly significantly soon after.
That could be troublesome going forward because we know that open gaps tend to be a lure, and once filled the lure is gone, and in the case of the XLF, the only open gaps now are on the downside.
The S&P 500 (C-fund) gapped up sharply on Tuesday, backed off and filled the open gaps fairly quickly, then came back to close with a big gain, although off the highs. The gap here did not quite get filled like we saw in some of the other charts, so I wouldn't be surprised if that happened today, but I'm a little concerned about it getting past there. The 50 and 200-day EMAs were rocks on the pullback last week and into Monday, and that is a good sign.
The DWCPF (S-fund) gained almost 2% on the day and again, backed off from the highs after filling the gap. Perhaps it just needed a rest after the big two day move.
The EFA (I-fund) rallied and stalled at the 200-day SMA which happens to be in its open gap. 62 - 63 may be a challenge here, but if it can get passed that area, it would be a pretty good green light.
The Dow Transportation Index also stalled at an area that could be concerning. The top of the gap was hit, and that coincides with the top of the rising trading channel and the 200-day EMA. It made it through once, but clearly that 9500 is going to be a crucial pivot point here.
The BND (F-fund) rallied early but backed off later, and with yields jumping early yesterday on the retail sales numbers, the F-fund was bound for a loss yesterday.
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.
