Stocks started the new week the way they ended last week - down. Unlike Friday however, this time it was a broader sell off as the small caps got hit as well. The Dow lost another 433-points, and we saw similar percentage losses in the S&P 500 and Nasdaq. On the bright side, the indices came off their lows to close near their highs of the day, despite the losses. Bonds and the dollar were both down.
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The S&P 500 / C-fund gapped down below the 50-day EMA on Monday, leaving a small open gap and some possible resistance. We did see a few days of chopping around below the 50-day EMA earlier this month before we saw a snap back rally, and since the average failed a second time we have to be on the lookout for a test of those early December lows. If yesterday was a reversal day, and that's not clear yet, then we'd want to see a close back above 4600 asap. The 4550 area looks like it could be some decent support, but if strong support breaks, then it could be trouble.
The DWCPF (S-fund) was down sharply giving back all of Friday's 1% gain. It closed below that green 280-day EMA for the first time since early 2020, but the positive reversal candlestick looks promising. Recapturing that moving average is job one today. One thing to notice here is that the moving averages are all still in the right spot with the faster averages still above the slower ones. But they are starting to rollover some, and that means a bottom really needs to be made soon to keep that order, and to have the bull market resume.
The EFA (I-fund) held up better after a positive reversal that took it from below the 200-day EMA at the open, to just above it by the close. That's a possible good sign if the bears don't push it right back down today. There is a small open gap above, and descending resistance is falling fast.
BND (Bonds / F-fund) opened higher and closed lower as yields started to rebound later in the day. It feels like this was trying to go higher, but with that large open gap below, and the blue bear flag forming, I just wouldn't want to touch this fund right now.
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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Let's get to some good news first before focusing on the damage. Micron posted strong earnings after the bell yesterday and was rallying after hours and that was pushing the index futures up as well. Just to give you an idea, the low on the Nasdaq 100 futures on Monday was 15,492 and after the first 15 minutes of trading after the bell and release of Micron's earnings, it was up to 15,685, or +193-points. That's a pretty big intraday reversal.
The S&P 500 futures were as low as 4520 on Monday and 15 minutes after the bell yesterday they were trading at 4571, or +51-points.
The Russell 2000 futures bottomed at 2102 and 15 minutes after the closing bell they were trading at 2142, or +40-points.
That's nearly a 2% swing so perhaps we have a reversal coming as the futures should open higher today, barring any negative news in the interim, but the action certainly can't be trusted just yet as the rallies have repeatedly been sold. That's where I am now - expecting some kind of a holiday relief rally but wondering if the rallies have to be sold now that the constant stimulus this market has enjoyed over the last couple of years (if not a lot longer) may be slipping away.
The Yield on the 10-year Treasury was up on the day after recovering from earlier losses, and the turnaround here seemed to trigger the turnaround in stocks as well. Yes, stocks were clobbered yesterday, but they did close quite a bit off their lows.
The price of oil, which is very economically sensitive, had a nice little rebound going in December, along with a bullish looking flag formation. Instead, the price tanked yesterday, although it rebounded off the lows along with stocks. This need to move back over 70 or this bear market in oil may start another leg down. Good for gas prices, but perhaps a bad sign for the economy.
Just a reminder of the weakness we saw late in 2018 that happened to hit a low on Christmas Eve before exploding higher. As I mentioned yesterday, it is not uncommon for the week after Christmas to move counter to the move before Christmas, so the next 3 days may be key in letting us what to do for next week.
The stock market and the TSP will be closed on Friday observing the Christmas holiday.
The S&P 500 futures were as low as 4520 on Monday and 15 minutes after the bell yesterday they were trading at 4571, or +51-points.
The Russell 2000 futures bottomed at 2102 and 15 minutes after the closing bell they were trading at 2142, or +40-points.
That's nearly a 2% swing so perhaps we have a reversal coming as the futures should open higher today, barring any negative news in the interim, but the action certainly can't be trusted just yet as the rallies have repeatedly been sold. That's where I am now - expecting some kind of a holiday relief rally but wondering if the rallies have to be sold now that the constant stimulus this market has enjoyed over the last couple of years (if not a lot longer) may be slipping away.
The Yield on the 10-year Treasury was up on the day after recovering from earlier losses, and the turnaround here seemed to trigger the turnaround in stocks as well. Yes, stocks were clobbered yesterday, but they did close quite a bit off their lows.
The price of oil, which is very economically sensitive, had a nice little rebound going in December, along with a bullish looking flag formation. Instead, the price tanked yesterday, although it rebounded off the lows along with stocks. This need to move back over 70 or this bear market in oil may start another leg down. Good for gas prices, but perhaps a bad sign for the economy.
Just a reminder of the weakness we saw late in 2018 that happened to hit a low on Christmas Eve before exploding higher. As I mentioned yesterday, it is not uncommon for the week after Christmas to move counter to the move before Christmas, so the next 3 days may be key in letting us what to do for next week.
The stock market and the TSP will be closed on Friday observing the Christmas holiday.
The S&P 500 / C-fund gapped down below the 50-day EMA on Monday, leaving a small open gap and some possible resistance. We did see a few days of chopping around below the 50-day EMA earlier this month before we saw a snap back rally, and since the average failed a second time we have to be on the lookout for a test of those early December lows. If yesterday was a reversal day, and that's not clear yet, then we'd want to see a close back above 4600 asap. The 4550 area looks like it could be some decent support, but if strong support breaks, then it could be trouble.
The DWCPF (S-fund) was down sharply giving back all of Friday's 1% gain. It closed below that green 280-day EMA for the first time since early 2020, but the positive reversal candlestick looks promising. Recapturing that moving average is job one today. One thing to notice here is that the moving averages are all still in the right spot with the faster averages still above the slower ones. But they are starting to rollover some, and that means a bottom really needs to be made soon to keep that order, and to have the bull market resume.
The EFA (I-fund) held up better after a positive reversal that took it from below the 200-day EMA at the open, to just above it by the close. That's a possible good sign if the bears don't push it right back down today. There is a small open gap above, and descending resistance is falling fast.
BND (Bonds / F-fund) opened higher and closed lower as yields started to rebound later in the day. It feels like this was trying to go higher, but with that large open gap below, and the blue bear flag forming, I just wouldn't want to touch this fund right now.
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
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Thanks for reading. Have a Merry Christmas, and a happy holiday to all of our TSP Talk family! We'll see you back here on Monday.
Tom Crowley
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. Have a Merry Christmas, and a happy holiday to all of our TSP Talk family! We'll see you back here on Monday.
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.
