It was a slow day for stocks on Wednesday and a late push higher was needed to move the indices just into positive territory. The Dow gained 0.07%, the S&P and Nasdaq picked up 0.14% each, and the Russell 2000 was up 0.13%. The S-fund was basically flat and the I-fund was given a 0.19% gain. Oil rallied, bonds were up, the Transports were down sharply, and the dollar was flat. Outside of the movie theater stock AMC, not much happened.
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The advance / decline issues were slightly positive and new highs easily outpaced new lows, but ...
... once again we saw astronomical trading volume from AMC (752 million shares traded) which was up just another 95% yesterday so we won't even show the share volume. Yup, AMC nearly doubled again yesterday after already doubling twice already in the last 4-weeks, so it has become the focus of the craziness on Wall Street. Ironically it was a very quiet day in most of the indices outside of the meme stocks.
With the S-fund having such a good year, but perhaps lagging more recently, I have been focusing on the Russell 2000 small caps index because of the interesting situation it is in, both on the chart and fundamentally. Small caps tend to do well when the economy is growing and especially in a low interest rate environment. But the recent concern about inflation has some believing the Fed may have to act at some point, to curb any acceleration in prices, which would almost certainly hurt the small caps most.
The chart of the Russell 2000 futures market shows us a better picture of just how critical the next move may be for the small caps, and of course our S-fund is impacted greatly by this. Yesterday's high in the futures flirted with a few other peaks over the last few months, with only one 5-day period back in early March seeing a close above that first green resistance line.
That could be part of the reason for the recent tentativeness in the market despite it being the first two days of a new month, which tend to have more fireworks. Is this recent rally running on fumes and perhaps running out of gas? That's possible but we've also seen how the Fed or Washington can reignite the market by throwing money at the economy, so we're always one headline away form another big rally. Without that however, maybe the market is due for a summer breather?
We get the May jobs report on Friday and estimates are looking for a gain of 740,000 jobs and an unemployment rate of 5.9%. If you recall last month was a giant miss, off by nearly a million, and I'm guessing they aren't going to let that happen again. Would a big upside surprise bring on a rally, or interest rate hike concerns?
The S&P 500 (C-fund) was up slightly on Wednesday but continues to stall in that 4200 and change area as it has done for the last 4+ weeks. Perhaps it is basing and getting ready for a breakout, and that's very possible, but it is also possible that a double top pullback is about to ensue.
The DWCPF (S-fund) was flat as the rising wedge pattern hit the apex this week, and yesterday it actually closed just below it. A breakdown could see a move down to the bottom of that trading channel that was created off the mid-May low, and that is about were the 50-day EMA meets the bottom of the channel.
The EFA / I-fund has been rallying steadily since successfully testing he 50-day EMA in early May, but now it is testing resistance and the top of the long trading channel.
The Dow Transportation Index had a bad day falling about 1% as it backs off from the recent highs again. It is now testing some short-term, but important, support at the bottom of that small blue trading channel.
The Volatility Index was down slightly during the very quiet trading day, but it remains above that key 16 area that has been longer term support.
BND (bonds / F-fund) was up again as it holds above the 50-day EMA, but below the longer-term resistance line.
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 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 advance / decline issues were slightly positive and new highs easily outpaced new lows, but ...
... once again we saw astronomical trading volume from AMC (752 million shares traded) which was up just another 95% yesterday so we won't even show the share volume. Yup, AMC nearly doubled again yesterday after already doubling twice already in the last 4-weeks, so it has become the focus of the craziness on Wall Street. Ironically it was a very quiet day in most of the indices outside of the meme stocks.
With the S-fund having such a good year, but perhaps lagging more recently, I have been focusing on the Russell 2000 small caps index because of the interesting situation it is in, both on the chart and fundamentally. Small caps tend to do well when the economy is growing and especially in a low interest rate environment. But the recent concern about inflation has some believing the Fed may have to act at some point, to curb any acceleration in prices, which would almost certainly hurt the small caps most.
The chart of the Russell 2000 futures market shows us a better picture of just how critical the next move may be for the small caps, and of course our S-fund is impacted greatly by this. Yesterday's high in the futures flirted with a few other peaks over the last few months, with only one 5-day period back in early March seeing a close above that first green resistance line.
That could be part of the reason for the recent tentativeness in the market despite it being the first two days of a new month, which tend to have more fireworks. Is this recent rally running on fumes and perhaps running out of gas? That's possible but we've also seen how the Fed or Washington can reignite the market by throwing money at the economy, so we're always one headline away form another big rally. Without that however, maybe the market is due for a summer breather?
We get the May jobs report on Friday and estimates are looking for a gain of 740,000 jobs and an unemployment rate of 5.9%. If you recall last month was a giant miss, off by nearly a million, and I'm guessing they aren't going to let that happen again. Would a big upside surprise bring on a rally, or interest rate hike concerns?
| Admin note: While prepping for our new premium feature, the Last Look Report, and diving into our payment processing code, I decided it was time to finally clean things up and get rid of the annoying .95 or .99 cents on some of our subscription prices and round up a penny to get whole dollars. So you may be seeing the price of a monthly subscription to RevShark for example, which has been $19.95 for 15 years, is going to $20 even. TSP Talk Plus will go up a penny from $17.99 to $18. I hope this isn't a problem for any of you. As for The Last Look Report, we're planning on implementing it next Monday with free access through that week, with a possible sneak peek later this week to a few forum members for some feedback. The info will come in a daily email from TommyIV about 30 minutes before the IFT deadline to help us make any last minute allocation decisions. It will also be posted in the premium area once the free trial is over. I'm sure it will evolve after we get started. The cost will be $10 a month, or $5 for those already subscribed to another service. Here's some info and a sample of what subscribers may get each morning. The Last Look Report Info. We worked on the backend stuff all weekend and we've already made a few changes from what you see there. I hope you like it. Thanks. |
The S&P 500 (C-fund) was up slightly on Wednesday but continues to stall in that 4200 and change area as it has done for the last 4+ weeks. Perhaps it is basing and getting ready for a breakout, and that's very possible, but it is also possible that a double top pullback is about to ensue.
The DWCPF (S-fund) was flat as the rising wedge pattern hit the apex this week, and yesterday it actually closed just below it. A breakdown could see a move down to the bottom of that trading channel that was created off the mid-May low, and that is about were the 50-day EMA meets the bottom of the channel.
The EFA / I-fund has been rallying steadily since successfully testing he 50-day EMA in early May, but now it is testing resistance and the top of the long trading channel.
The Dow Transportation Index had a bad day falling about 1% as it backs off from the recent highs again. It is now testing some short-term, but important, support at the bottom of that small blue trading channel.
The Volatility Index was down slightly during the very quiet trading day, but it remains above that key 16 area that has been longer term support.
BND (bonds / F-fund) was up again as it holds above the 50-day EMA, but below the longer-term resistance line.
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 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.
