Stocks were mixed again on Monday with the Nasdaq shining, the S&P rallying late, while the Dow (-151-points) and small caps lagged with modest losses. The dollar was down slightly, bonds were up, which means yields were down again.
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The signs of a strengthening economy are not being shown in the bond market as yields continue to trade near recent lows, and the 10-year Treasury Yield is having a difficult getting back above its 50-day EMA. Why? Either the economy isn't growing as fast as many think, or the Fed's bond buying is disrupting what the bond market "should" be doing in a growing economy.
Two charts that are interesting because of the different message they may be sending. The SOXX semiconductor index just broke out of a very nice looking bullish inverted head and shoulders pattern yesterday. Sounds like a bullish indicator for the economy.
However, the Transportation Index may be telling a different story as it continues to break down from the may highs. The Transports are also very economically sensitive, so what's the difference? Perhaps the rapidly rising price of oil isn't helping here, but oil was down sharply yesterday, and the Transports still lost 1%.
And, as we've mentioned before, the weakness in the Transports also helped trigger an old Dow Theory sell signal recently.
The S&P 500 (C-fund) made yet another new high yesterday and the rally off the test of the 50-day EMA has been almost straight up. The PMO indicator just moved above its moving average but as we talked about, there is a negative divergence between the direction of the S&P 500, and the direction of the PMO.
The DWCPF (S-fund) popped up to a new high early on Monday but quickly backed off and nearly put in a negative reversal day, but a late rally helped it close well off the lows. The dip buyers were certainly still there, but something triggered selling near 2287.
The EFA (I-fund) fell sharply and it looks like a bear flag may be forming here. The bull flag on the UUP dollar chart doesn't help.
I talked about the Transports above but here's the chart and yesterday we talked about the importance of which side of that small flag pattern this may break, and yesterday it did break down, although it did close off the lows so there was some buying at those lows.
BND (bonds / F-fund) was up again as it chops around in the 85.50 - 86.00 area, which is above the 200-day EMA. The sideways move may be buying time for it to build strength to eventually attempt to fill in the open gap from February.
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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[TD="align: center"] Daily TSP Funds Return
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[TD="align: right"][/TD]
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[TD="align: center"]
[/TR]
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The signs of a strengthening economy are not being shown in the bond market as yields continue to trade near recent lows, and the 10-year Treasury Yield is having a difficult getting back above its 50-day EMA. Why? Either the economy isn't growing as fast as many think, or the Fed's bond buying is disrupting what the bond market "should" be doing in a growing economy.
Two charts that are interesting because of the different message they may be sending. The SOXX semiconductor index just broke out of a very nice looking bullish inverted head and shoulders pattern yesterday. Sounds like a bullish indicator for the economy.
However, the Transportation Index may be telling a different story as it continues to break down from the may highs. The Transports are also very economically sensitive, so what's the difference? Perhaps the rapidly rising price of oil isn't helping here, but oil was down sharply yesterday, and the Transports still lost 1%.
And, as we've mentioned before, the weakness in the Transports also helped trigger an old Dow Theory sell signal recently.
The S&P 500 (C-fund) made yet another new high yesterday and the rally off the test of the 50-day EMA has been almost straight up. The PMO indicator just moved above its moving average but as we talked about, there is a negative divergence between the direction of the S&P 500, and the direction of the PMO.
The DWCPF (S-fund) popped up to a new high early on Monday but quickly backed off and nearly put in a negative reversal day, but a late rally helped it close well off the lows. The dip buyers were certainly still there, but something triggered selling near 2287.
The EFA (I-fund) fell sharply and it looks like a bear flag may be forming here. The bull flag on the UUP dollar chart doesn't help.
I talked about the Transports above but here's the chart and yesterday we talked about the importance of which side of that small flag pattern this may break, and yesterday it did break down, although it did close off the lows so there was some buying at those lows.
BND (bonds / F-fund) was up again as it chops around in the 85.50 - 86.00 area, which is above the 200-day EMA. The sideways move may be buying time for it to build strength to eventually attempt to fill in the open gap from February.
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.
