Stocks pulled back on Thursday after it was reported that another 3.8 million people filed for first time unemployment benefits last week. No surprise there, and we had actually been seeing some "buy the [bad] news" reactions recently, so yesterday was a little different. Bad news was treated as bad news, even after the earnings driven rallies in Microsoft and Facebook. Those two did help make the Nasdaq the leader yesterday, but it was still negative.
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Fast forward to after the bell yesterday and we saw some poor reactions to earnings reports from big tech companies like Amazon and Apple, so the market will start Friday with a headwind rather than a breeze at its back.
It's too early to say if Friday will close negative, although barring anything new over night on Thursday, it is shaping up that way. The thing is, we only saw back to back losses in the S&P 500 once all of April, after only one rally of more than 1-day in March. So what kind of month will May be?
It's the time of year where we throw out the saying, "sell in May and go away", as the historically weaker six month period of the year begins, but something tells me seasonality won't play a major role for stocks this summer. Yes, it could be bearish, as the saying goes, but not because of seasonality. But because we've destroyed the economy.
According to our friends at sentimenTrader.com, here is how the S&P 500 performed over the last nearly 60 years, when it was down more than 5% through the end of April.
Chart provided courtesy of www.sentimentrader.com
The first week of May did well, being up 80% of the time, but the rest of the year - not so much.
Again, this isn't a typical year so I'm not sure whether we should expect typical behavior based on past performances.
The S&P 500 (C-fund) dipped almost 1% on Thursday, but that didn't even give up half of Wednesday's gains. What it did do was keep the index below the 200-day EMA. 2900 on the downside, and the 200-day on the upside look to be the keys here.
The DWCPF / S-fund took a nearly 3% haircut on Thursday, but again that only put a dent in the 4.3% gains from Wednesday. It does tell us that volatility is still in town, and that can give the bears an advantage. 1300 and around 1215 are the areas I am watching for resistance and support.
The price of oil rallied 25% yesterday and these moves are rather remarkable as it feels like it has become like a penny stock or high tech growth company the way it moves. It seems to be in a situation where it is creating a big bear flag or, if it can manage to get back above about $25 or $30, it could become a successful double bottom.
The EFA was down sharply and it closed back below the 50-day EMA. And that was on a day that saw the dollar fall, so it even had a bit of a cushion. The channel (or wedge) is still intact with any decline falling below 56 being potentially big trouble.
Just to keep us guessing, the HYG had a good day closing up on the day, and above the 50-day EMA for a second straight day. With the Fed helping as much as they can, the credit market may remain strong, and that could be what keeps us from seeing a test of the lows in stocks, if that's even a thought anymore.
The BND / F-fund has been flat lining for a few weeks and something is likely going to give soon. 87.76 is the all-time highest close for this ETF, which happened on March 6, but it has been knocking on that door for the last three weeks. Is it getting too tired, or is the door about to get opened to new highs?
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. Have a great weekend!
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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Fast forward to after the bell yesterday and we saw some poor reactions to earnings reports from big tech companies like Amazon and Apple, so the market will start Friday with a headwind rather than a breeze at its back.
It's too early to say if Friday will close negative, although barring anything new over night on Thursday, it is shaping up that way. The thing is, we only saw back to back losses in the S&P 500 once all of April, after only one rally of more than 1-day in March. So what kind of month will May be?
It's the time of year where we throw out the saying, "sell in May and go away", as the historically weaker six month period of the year begins, but something tells me seasonality won't play a major role for stocks this summer. Yes, it could be bearish, as the saying goes, but not because of seasonality. But because we've destroyed the economy.
According to our friends at sentimenTrader.com, here is how the S&P 500 performed over the last nearly 60 years, when it was down more than 5% through the end of April.
Chart provided courtesy of www.sentimentrader.com
The first week of May did well, being up 80% of the time, but the rest of the year - not so much.
Again, this isn't a typical year so I'm not sure whether we should expect typical behavior based on past performances.
The S&P 500 (C-fund) dipped almost 1% on Thursday, but that didn't even give up half of Wednesday's gains. What it did do was keep the index below the 200-day EMA. 2900 on the downside, and the 200-day on the upside look to be the keys here.
The DWCPF / S-fund took a nearly 3% haircut on Thursday, but again that only put a dent in the 4.3% gains from Wednesday. It does tell us that volatility is still in town, and that can give the bears an advantage. 1300 and around 1215 are the areas I am watching for resistance and support.
The price of oil rallied 25% yesterday and these moves are rather remarkable as it feels like it has become like a penny stock or high tech growth company the way it moves. It seems to be in a situation where it is creating a big bear flag or, if it can manage to get back above about $25 or $30, it could become a successful double bottom.
The EFA was down sharply and it closed back below the 50-day EMA. And that was on a day that saw the dollar fall, so it even had a bit of a cushion. The channel (or wedge) is still intact with any decline falling below 56 being potentially big trouble.
Just to keep us guessing, the HYG had a good day closing up on the day, and above the 50-day EMA for a second straight day. With the Fed helping as much as they can, the credit market may remain strong, and that could be what keeps us from seeing a test of the lows in stocks, if that's even a thought anymore.
The BND / F-fund has been flat lining for a few weeks and something is likely going to give soon. 87.76 is the all-time highest close for this ETF, which happened on March 6, but it has been knocking on that door for the last three weeks. Is it getting too tired, or is the door about to get opened to new highs?
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. Have a great weekend!
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.
