Stocks tumbled on Friday, making it only the second time that we saw back to back losing day for the Dow and S&P since the start of April. New month / new direction? Or is this another one of those first of the month fake outs? The Dow lost 622-points and weakness in big tech took its toll on the broader market indices.
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The first trading day of recent months has actually been a fake out to the month's eventual direction. February rallied on day one, ended the month down. The first day in March was another big up day, and it turned into an awful month for stocks. April 1 closed sharply on the downside, and it was a terrific month for stocks. So was Friday's May 1 sell off a good omen for May? Do you even notice that once we observe a pattern, it tends to break shortly there after? We'll see.
The sell-off in Amazon, Apple, Microsoft, Facebook, etc., seemed to trigger the broader weakness for stocks, but there was a difference on Friday that could turn out to be meaningful. The rising support coming off of the March lows was broken on Friday. Just as the breaking of the downtrend in late March led to bullish things, this could mean something bearish. On the bullish side, there is a possibility that the 50 and 200-day EMAs could try to hold as support, now that this chart is trading above them.
The futures opened sharply lower on Sunday evening, but we can't always trust a gap move on an emotional Monday morning. We'll see if there is any dip buying if this weakness rolls into Monday morning's opening. Admin Note: See our new free weekly commentary from Intrepid Timer: Intrepid Timer's: Weekly Chart Analysis...
The S&P 500 (C-fund) fell through a few levels of support recently, but it held above the 50-day EMA on Friday. If the futures stay down overnight, they are currently down more than 1% as of this writing, we could see this gap down below the 50-day EMA.
The weekly chart shows a fairly bearish looking shooting star candlestick reversal pattern with that long kangaroo tail at the top. The top of that tail also happens to be near the top of the meat of the trading range we've been in since late 2017. The few breakouts from that range have eventually corrected back into it.
The DWCPF / S-fund hit the top of that rising trading channel last week and pulled back toward the lower end. It closed just below the 50-day EMA.
The EFA fell out of one of its rising trading channels on Friday, but like a break above or below a moving average, we don't immediately confirm this as a breakdown, but the clock starts ticking now with this initial crack in the technical picture. It only managed one close above the 50-day EMA last week.
The Dow Transportation Index broke one rising support line a couple of week ago, and that line (blue dashed) acted as resistance last week. Now it is testing the bottom of the newer trading channel (red).
The BND / F-fund was down on Friday and this chart remains in the area just off the March closing highs. Those wide swings in March distort this chart to some degree making it tough to see the subtle moves going on.
We can zoom in to see the narrow range it is in a lot better. There's a chance the open gap near 86.40 may want to get filled, but any close above 87.59 would be a new closing high. That used to be 87.76, as we mentioned on Friday, but this price was adjusted recently for a dividend payment.
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. Well 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 first trading day of recent months has actually been a fake out to the month's eventual direction. February rallied on day one, ended the month down. The first day in March was another big up day, and it turned into an awful month for stocks. April 1 closed sharply on the downside, and it was a terrific month for stocks. So was Friday's May 1 sell off a good omen for May? Do you even notice that once we observe a pattern, it tends to break shortly there after? We'll see.
The sell-off in Amazon, Apple, Microsoft, Facebook, etc., seemed to trigger the broader weakness for stocks, but there was a difference on Friday that could turn out to be meaningful. The rising support coming off of the March lows was broken on Friday. Just as the breaking of the downtrend in late March led to bullish things, this could mean something bearish. On the bullish side, there is a possibility that the 50 and 200-day EMAs could try to hold as support, now that this chart is trading above them.
The futures opened sharply lower on Sunday evening, but we can't always trust a gap move on an emotional Monday morning. We'll see if there is any dip buying if this weakness rolls into Monday morning's opening. Admin Note: See our new free weekly commentary from Intrepid Timer: Intrepid Timer's: Weekly Chart Analysis...
The S&P 500 (C-fund) fell through a few levels of support recently, but it held above the 50-day EMA on Friday. If the futures stay down overnight, they are currently down more than 1% as of this writing, we could see this gap down below the 50-day EMA.
The weekly chart shows a fairly bearish looking shooting star candlestick reversal pattern with that long kangaroo tail at the top. The top of that tail also happens to be near the top of the meat of the trading range we've been in since late 2017. The few breakouts from that range have eventually corrected back into it.
The DWCPF / S-fund hit the top of that rising trading channel last week and pulled back toward the lower end. It closed just below the 50-day EMA.
The EFA fell out of one of its rising trading channels on Friday, but like a break above or below a moving average, we don't immediately confirm this as a breakdown, but the clock starts ticking now with this initial crack in the technical picture. It only managed one close above the 50-day EMA last week.
The Dow Transportation Index broke one rising support line a couple of week ago, and that line (blue dashed) acted as resistance last week. Now it is testing the bottom of the newer trading channel (red).
The BND / F-fund was down on Friday and this chart remains in the area just off the March closing highs. Those wide swings in March distort this chart to some degree making it tough to see the subtle moves going on.
We can zoom in to see the narrow range it is in a lot better. There's a chance the open gap near 86.40 may want to get filled, but any close above 87.59 would be a new closing high. That used to be 87.76, as we mentioned on Friday, but this price was adjusted recently for a dividend payment.
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. Well 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.
