Stocks were down yesterday making it three days in a row of losses, and four days in a row where the indices closed near the lows of the day after late sell offs. Trading volume isn't very high so it may not be institutional selling, but clearly the sellers have been dominating the final hour of trading this week. Both yields and the dollar reversed their earlier moves adding to days flip flopping action.
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This is a holiday shortened week for the stock and bond markets and the exchanges will be closed on Friday for Good Friday and perhaps it is contributing to the light volume trading, which could cause some volatility as the indices can get pushed around by just a few big players.
We did get word from tsp.gov regarding Friday: "Some financial markets will be closed on Friday, March 29, in observance of Good Friday. Consequently, the Thrift Savings Plan will not be updating share prices in any of the TSP funds for that day. Transactions that would have been processed Friday night (March 29) will be processed Monday night (April 1) at Monday's closing share prices."
Since there will be no trading and the TSP won't process transfers, we will also take the day off and not update our market commentaries, nor post premium reports on Friday.
Despite the market being closed on Friday, the PCE Prices report will be released on Friday morning, so we won't see how the markets react until Monday - unless you're keeping an eye on the futures markets.
The 10-year Yield was up early yesterday but reversed and closer lower and at the lows of the day. So much for stocks moving counter to yields because they were doing better when yields were higher in early trading. The inverted head and shoulders pattern, to me, suggests an eventual breakout to the upside, but why would yields go up? I can think of two reasons but the two would probably be greeted differently on Wall Street: Higher inflation and / or strong economic data.
The dollar was down early but reversed higher putting pressure on stocks in that final hour of trading. It remains just below the February peak after the failed breakout last week. This looks like it wants to go higher but there is still time for a possible double top pullback, or at least a fill of that slightly open gap.
The Dow Transportation Index was down modestly yesterday, but we might have expected a larger loss after UPS tanked 8% on the day. The Transports had an opportunity to fill the open gap from last week but didn't even make it that low. So far it looks like some cleaning up as it remains in the four month long trading range. The question is whether it can hold at the 50-day EMA again, if tested, or if another push down to the 200-day average is in the cards?
After today there is just one trading day left in March and the first quarter of 2024. All three months in 2024 have been positive and if we go back to 2023, that's five straight monthly gains. Are we due for a pullback?
According to JTH, our crack statistician in the forum:
"From 63 years, Jan/Feb/Mar closed positive 18 times. From this, April's win ratio was 77.8% with an average 2.40% gain, or a -22.2% lose ratio with an average -1.46% lose."
The S&P 500 (C-fund) lost early gains in that final hour of trading, and that created one of those negative reversal days. If we squint we can see that it's even an outside reversal day, making it a little worse. But those two breakup candlesticks are getting retraced, which is normal, and support is still firmly below the current levels, so unless something changes I'd expect dip buyers to show up soon. One bearish twist on this chart is the negative divergence in the PMO momentum indicator. Also, late selling isn't usually a great sign of market strength.
DWCPF (S-fund) was flat yesterday after giving up an early healthy gain. Retracing that large candlestick from March 20th is normal action, so this could go lower, but we also have a possible inverted head and shoulders pattern forming, which would typically be bullish looking out a week or more.
EFA (I-fund) was up slightly as it trades within that blue flag formation. There's open gaps below that may need addressing so any pullback to the bottom of the flag, which currently coincides with the where the 20-day EMA is heading, will be a major test of this chart. Will support hold or will gaps be too much of a lure?
BND (Bonds / F-fund) managed a small gain after a positive reversal bounce off the 20-day EMA, which also was the bottom of an old, already filled, gap from earlier this month. The swings may tighten up as this trades within the narrowing apex of a pennant formation.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
Daily Market Commentary Archives
To get weekly or daily notifications when we post new commentary, sign up HERE.
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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This is a holiday shortened week for the stock and bond markets and the exchanges will be closed on Friday for Good Friday and perhaps it is contributing to the light volume trading, which could cause some volatility as the indices can get pushed around by just a few big players.
We did get word from tsp.gov regarding Friday: "Some financial markets will be closed on Friday, March 29, in observance of Good Friday. Consequently, the Thrift Savings Plan will not be updating share prices in any of the TSP funds for that day. Transactions that would have been processed Friday night (March 29) will be processed Monday night (April 1) at Monday's closing share prices."
Since there will be no trading and the TSP won't process transfers, we will also take the day off and not update our market commentaries, nor post premium reports on Friday.
Despite the market being closed on Friday, the PCE Prices report will be released on Friday morning, so we won't see how the markets react until Monday - unless you're keeping an eye on the futures markets.
The 10-year Yield was up early yesterday but reversed and closer lower and at the lows of the day. So much for stocks moving counter to yields because they were doing better when yields were higher in early trading. The inverted head and shoulders pattern, to me, suggests an eventual breakout to the upside, but why would yields go up? I can think of two reasons but the two would probably be greeted differently on Wall Street: Higher inflation and / or strong economic data.
The dollar was down early but reversed higher putting pressure on stocks in that final hour of trading. It remains just below the February peak after the failed breakout last week. This looks like it wants to go higher but there is still time for a possible double top pullback, or at least a fill of that slightly open gap.
The Dow Transportation Index was down modestly yesterday, but we might have expected a larger loss after UPS tanked 8% on the day. The Transports had an opportunity to fill the open gap from last week but didn't even make it that low. So far it looks like some cleaning up as it remains in the four month long trading range. The question is whether it can hold at the 50-day EMA again, if tested, or if another push down to the 200-day average is in the cards?
After today there is just one trading day left in March and the first quarter of 2024. All three months in 2024 have been positive and if we go back to 2023, that's five straight monthly gains. Are we due for a pullback?
According to JTH, our crack statistician in the forum:
"From 63 years, Jan/Feb/Mar closed positive 18 times. From this, April's win ratio was 77.8% with an average 2.40% gain, or a -22.2% lose ratio with an average -1.46% lose."
The S&P 500 (C-fund) lost early gains in that final hour of trading, and that created one of those negative reversal days. If we squint we can see that it's even an outside reversal day, making it a little worse. But those two breakup candlesticks are getting retraced, which is normal, and support is still firmly below the current levels, so unless something changes I'd expect dip buyers to show up soon. One bearish twist on this chart is the negative divergence in the PMO momentum indicator. Also, late selling isn't usually a great sign of market strength.
DWCPF (S-fund) was flat yesterday after giving up an early healthy gain. Retracing that large candlestick from March 20th is normal action, so this could go lower, but we also have a possible inverted head and shoulders pattern forming, which would typically be bullish looking out a week or more.
EFA (I-fund) was up slightly as it trades within that blue flag formation. There's open gaps below that may need addressing so any pullback to the bottom of the flag, which currently coincides with the where the 20-day EMA is heading, will be a major test of this chart. Will support hold or will gaps be too much of a lure?
BND (Bonds / F-fund) managed a small gain after a positive reversal bounce off the 20-day EMA, which also was the bottom of an old, already filled, gap from earlier this month. The swings may tighten up as this trades within the narrowing apex of a pennant formation.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
Daily Market Commentary Archives
To get weekly or daily notifications when we post new commentary, sign up HERE.
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.
