Another rally for stocks, which was very welcomed by the bulls after Tuesday sharp pullback. The Dow is basically at an all time high and the S&P 500 is just off the recent highs. It was difficult to find anything down yesterday including stocks, bonds, gold, silver, bitcoin. The one key thing that was down didn't break any hearts as oil dipped slightly.
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I wouldn't call this a melt up yet, but stocks have been rallying for the last couple of weeks, and going back further, since the Fed's 0.50% interest rate cut, and before that the jobs report released in early September. But it's the indices like the small caps of the Russell 2000 and the Dow Transportation Index, which are finally at, or breaking above, this year's highs. So the rally has broadened past the big tech stocks, but has it come too far too fast and hit resistance?
First the good news; the 10-year Treasury Yield was down again as the pullback off of the 200-day EMA resistance continued, and there are plenty of open gaps below to act as potential downside targets. The question here is, what was that rally all about? It was triggered by stronger than expected economic data, so it wasn't really bad news.
However, the rally in yields pulled the F-fund down, so if you have been in that TSP fund this month, you have lost money, but it is trying to rebound while the yields start to dip again. The F-fund moves counter to yields.
Back to stocks, there are a couple of charts that could be the tell for the next few weeks, especially with earnings season just starting to get in motion. Both Nvidia and the Russell 2000 small caps index (IWM) charts are bumping up against their prior highs, and as we talk about often, double tops are one of the best indications for short-term activity, as they tend to produce pullbacks.
If those charts don't breakout to new highs, and do start to pullback, look for the rest of the market to follow.
The market leading Dow Transportation Index did finally breakout this week and yesterday's nearly 2% gain put the icing on the cake. A failure here at the breakout level would be quite bearish, but for now this market leader is trying to give the green light to the rest of the stock market. The bad news is that yesterday's rally in the Transports was triggered mostly from a big move higher in the airlines stocks - one of the most fickle sectors in the stock market, so they could reverse on a dime with one single headline.
Stocks are clearly doing well, and if you're not invested you've missed some good gains. If you're partially invested, at least you've made some money while being defensive, but if you've been fully invested - congratulations. But holding onto gains is just as important as making them, so be careful.
Admin Note: In the coming weeks we may be working on a server and software upgrade, starting with the forum, that could disrupt the website periodically. I've procrastinated long enough and it's time to get it done. The maintenance could take part or all of the website down at times, but it will not impact Premium Service email and text alerts. I'll keep you posted.
The S&P 500 (C-fund) tagged the top of its rising wedge pattern again and that gives the bears a little advantage, unless they can gap it above that resistance at the open. Between the election, the movements by the Fed, and the surprising strength in the economy, we have a good set up, but this chart formation isn't one of the bullish signs - unless it can get above 5850 and that rising resistance line.
DWCPF (S-fund) had a very strong day as small caps are perking up again. The breakout looks real as it has now closed above that resistance line for 4 straight days. I always say give it 3 to 5 days to confirm a breakout (or breakdown) so we're right on the verge.
The I-fund: The EFA was up 0.26% yesterday, ACWX was up 0.48%, and the "ex USA ex China ex Hong Kong Index" was down 0.56%. This guessing game for the daily I-fund price may go on through the end of the year as the TSP transitions into the new tracking index, which is supposed to eventually mimic the "ex USA ex China ex Hong Kong Index." You can see the TSP's eventual final daily price and return posted on our site each evening.
The recent rally in the dollar has put a ton of pressure on the EFA and the I-fund this month, but they are both nearing some possible support at the lower end of the ascending trading channel.
The dollar is extended well above its moving averages and due for a pullback, which should help stop the bleeding in the I-fund, or at least see it outperform US stock while the dollar is falling - assuming it does.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
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.
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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I wouldn't call this a melt up yet, but stocks have been rallying for the last couple of weeks, and going back further, since the Fed's 0.50% interest rate cut, and before that the jobs report released in early September. But it's the indices like the small caps of the Russell 2000 and the Dow Transportation Index, which are finally at, or breaking above, this year's highs. So the rally has broadened past the big tech stocks, but has it come too far too fast and hit resistance?
First the good news; the 10-year Treasury Yield was down again as the pullback off of the 200-day EMA resistance continued, and there are plenty of open gaps below to act as potential downside targets. The question here is, what was that rally all about? It was triggered by stronger than expected economic data, so it wasn't really bad news.
However, the rally in yields pulled the F-fund down, so if you have been in that TSP fund this month, you have lost money, but it is trying to rebound while the yields start to dip again. The F-fund moves counter to yields.
Back to stocks, there are a couple of charts that could be the tell for the next few weeks, especially with earnings season just starting to get in motion. Both Nvidia and the Russell 2000 small caps index (IWM) charts are bumping up against their prior highs, and as we talk about often, double tops are one of the best indications for short-term activity, as they tend to produce pullbacks.
If those charts don't breakout to new highs, and do start to pullback, look for the rest of the market to follow.
The market leading Dow Transportation Index did finally breakout this week and yesterday's nearly 2% gain put the icing on the cake. A failure here at the breakout level would be quite bearish, but for now this market leader is trying to give the green light to the rest of the stock market. The bad news is that yesterday's rally in the Transports was triggered mostly from a big move higher in the airlines stocks - one of the most fickle sectors in the stock market, so they could reverse on a dime with one single headline.
Stocks are clearly doing well, and if you're not invested you've missed some good gains. If you're partially invested, at least you've made some money while being defensive, but if you've been fully invested - congratulations. But holding onto gains is just as important as making them, so be careful.
Admin Note: In the coming weeks we may be working on a server and software upgrade, starting with the forum, that could disrupt the website periodically. I've procrastinated long enough and it's time to get it done. The maintenance could take part or all of the website down at times, but it will not impact Premium Service email and text alerts. I'll keep you posted.
The S&P 500 (C-fund) tagged the top of its rising wedge pattern again and that gives the bears a little advantage, unless they can gap it above that resistance at the open. Between the election, the movements by the Fed, and the surprising strength in the economy, we have a good set up, but this chart formation isn't one of the bullish signs - unless it can get above 5850 and that rising resistance line.
DWCPF (S-fund) had a very strong day as small caps are perking up again. The breakout looks real as it has now closed above that resistance line for 4 straight days. I always say give it 3 to 5 days to confirm a breakout (or breakdown) so we're right on the verge.
The I-fund: The EFA was up 0.26% yesterday, ACWX was up 0.48%, and the "ex USA ex China ex Hong Kong Index" was down 0.56%. This guessing game for the daily I-fund price may go on through the end of the year as the TSP transitions into the new tracking index, which is supposed to eventually mimic the "ex USA ex China ex Hong Kong Index." You can see the TSP's eventual final daily price and return posted on our site each evening.
The recent rally in the dollar has put a ton of pressure on the EFA and the I-fund this month, but they are both nearing some possible support at the lower end of the ascending trading channel.
The dollar is extended well above its moving averages and due for a pullback, which should help stop the bleeding in the I-fund, or at least see it outperform US stock while the dollar is falling - assuming it does.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
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.
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.
