Stocks rallied back on Monday after the dramatic losses on Friday, but the magnitude of the rebound, along with the light volume and slight fade near the close, makes it a little suspect. The Dow gained 144-points, well off the highs, while the Nasdaq and small caps led on the upside with gains over 1%. The I-fund lagged dealing with a strong dollar yesterday, and bonds were down slightly but they came back from steeper morning losses.
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It was a good day for stocks to start the week, particularly giving what the Chinese Shanghai Index did on Monday (down 7.7%), but the close was a little shaky and many indices posted negative reversals on the chart so it feels like the bears may not want to let go so easily.
Google (Alphabet) reported earnings after the bell, posting a rare miss on revenue and earnings. The stock was down sharply in after hours trading, but it had been up $54 during the normal trading hours so the initial reaction is just giving back a little more than Monday's gains. The futures were down modestly after Google's report, but surprisingly not too much.
Was the rally yesterday a one hit wonder rebound, or the real deal? The way the charts are setting up I was thinking Google's earnings might set up one of those "gap and go" formations that we saw in October, but it doesn't look like they will be the catalyst.
We got some some strong economic data yesterday with the ISM Manufacturing Index, and yields rallied on the news early, but they faded as the day went on and the 10-year T-Note yield closed down near Friday's lows again, which of course is testing the lows made in October, as we talked about yesterday. That's a little troubling. If this breaks down, stocks will rollover again.
The price of oil and copper were both down yet again as their free falls continue.
The Iowa Caucuses (not over as of this writing) could be a market mover, I suppose. It's obviously very early in the process, but the market does have a concern about some of the more left leaning Democratic candidates like Sanders and Warren, so if they start picking up wins in the primaries, the market could start getting a little cranky as they'd prefer a more moderate candidate to take on President Trump. And, like any presidential election year, the current administration will do what it can to keep things shining and the stock market elevated, while the challenging party will poke holes in the economic picture whenever they can. Therefore, it may be tough to rely on any headline in the coming months, but rather the market itself may be the best indicator.
The S&P 500 (C-fund) rallied yesterday and most importantly held above the 50-day EMA for another day after flirting with a breakdown on Friday. However, the short-term descending resistance line off the highs is still holding, as is the 20-day EMA, so the bulls really need this to move up above 3275 to perhaps send an all's clear to investors. If that doesn't happen, then the bears can still make their move. With the 50-day EMA holding as Friday's low, the open gap by 3200 is still technically open.
The DWCPF (S-fund) had a big day but it too held at its descending resistance line. The the set up for the "gap and go" I mentioned is there as we compare the October lows with the recent action. That red open gap in October was never filled and that is the gap and go. But even without a gap, any positive day here would likely break that resistance line, and still being above the 50-day EMA means it "should" be a little easier than it was in October. But will it be?
The Dow Transportation Index rallied early, but faded to give up much of its morning gain. It's once again testing the bottom of a parallel channel, but it has now closed just below the 200-day EMA for two straight days. That's always a concern.
The EFA (I-fund) also rallied but the action wasn't all that great, and the move higher in the dollar yesterday didn't help. The technical picture is a little shaky here as it remains below its 50-day EMA.
The AGG (bonds / F-fund) bounced back from bigger early losses to close with just a small loss, although the TSP gave the F-fund a small gain. There must be some adjusting going on.
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
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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It was a good day for stocks to start the week, particularly giving what the Chinese Shanghai Index did on Monday (down 7.7%), but the close was a little shaky and many indices posted negative reversals on the chart so it feels like the bears may not want to let go so easily.
Google (Alphabet) reported earnings after the bell, posting a rare miss on revenue and earnings. The stock was down sharply in after hours trading, but it had been up $54 during the normal trading hours so the initial reaction is just giving back a little more than Monday's gains. The futures were down modestly after Google's report, but surprisingly not too much.
Was the rally yesterday a one hit wonder rebound, or the real deal? The way the charts are setting up I was thinking Google's earnings might set up one of those "gap and go" formations that we saw in October, but it doesn't look like they will be the catalyst.
We got some some strong economic data yesterday with the ISM Manufacturing Index, and yields rallied on the news early, but they faded as the day went on and the 10-year T-Note yield closed down near Friday's lows again, which of course is testing the lows made in October, as we talked about yesterday. That's a little troubling. If this breaks down, stocks will rollover again.
The price of oil and copper were both down yet again as their free falls continue.
The Iowa Caucuses (not over as of this writing) could be a market mover, I suppose. It's obviously very early in the process, but the market does have a concern about some of the more left leaning Democratic candidates like Sanders and Warren, so if they start picking up wins in the primaries, the market could start getting a little cranky as they'd prefer a more moderate candidate to take on President Trump. And, like any presidential election year, the current administration will do what it can to keep things shining and the stock market elevated, while the challenging party will poke holes in the economic picture whenever they can. Therefore, it may be tough to rely on any headline in the coming months, but rather the market itself may be the best indicator.
The S&P 500 (C-fund) rallied yesterday and most importantly held above the 50-day EMA for another day after flirting with a breakdown on Friday. However, the short-term descending resistance line off the highs is still holding, as is the 20-day EMA, so the bulls really need this to move up above 3275 to perhaps send an all's clear to investors. If that doesn't happen, then the bears can still make their move. With the 50-day EMA holding as Friday's low, the open gap by 3200 is still technically open.
The DWCPF (S-fund) had a big day but it too held at its descending resistance line. The the set up for the "gap and go" I mentioned is there as we compare the October lows with the recent action. That red open gap in October was never filled and that is the gap and go. But even without a gap, any positive day here would likely break that resistance line, and still being above the 50-day EMA means it "should" be a little easier than it was in October. But will it be?
The Dow Transportation Index rallied early, but faded to give up much of its morning gain. It's once again testing the bottom of a parallel channel, but it has now closed just below the 200-day EMA for two straight days. That's always a concern.
The EFA (I-fund) also rallied but the action wasn't all that great, and the move higher in the dollar yesterday didn't help. The technical picture is a little shaky here as it remains below its 50-day EMA.
The AGG (bonds / F-fund) bounced back from bigger early losses to close with just a small loss, although the TSP gave the F-fund a small gain. There must be some adjusting going on.
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
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.
