The Nvidia driven rally on Thursday saw some follow through on Friday with big gains in the stock indices across the board as a debt deal in DC appeared closer. Bonds were up as well to make it a sweep for the bulls in the TSP Funds. The Dow gained 329-points while the Nasdaq led the way again with a gain of over 2%. With a debt deal nearly done, will stocks continue to move higher this week, or will we get a "sell the news" reaction?
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May has been a very interesting month for the stock market. The action has been very choppy and with the strong rally in the dollar and Treasury yields, the I-fund and the F-fund have been tumbling, so it has been a mixed bag for the various TSP funds. With the debt ceiling likely being lifted yet again, the issuance of new bonds and increase in debt has created this situation, but as I asked above, will this all change after a deal is finally inked in?
The rally in the 10-year Yield Treasury Note has the F-fund down more than 2% this month. We did see a bit of a negative reversal in yields on Friday as talks of a deal were circulating. The 10-year yield nearly filled that open gap before backing off, so maybe it is time for a snap back rally in bonds and the F-fund?
The EFA (I-fund) has been lagging but maybe with the dollar testing overhead resistance, there will be some kind of exhale if or when a deal is signed.
The I-fund has been lagging badly this month because of the dollar's strength, and that is despite the I-fund biggest holdings are making new multi-year highs. It may be trying to find support in that 72 area.
Japanese stocks are still the largest holding in the I-fund with 22% of the fund invested in the Japanese stock market, or 235 different companies. The UK is second at 15% with 82 companies. The reason I bring this up is because the Japanese stock market has been on fire this year. Unfortunately for anyone in the I-fund fund recently, the strength in the dollar has been holding it back despite the strength in this market.
There is some resistance near last week's high on The Japanese Nikkei Average as you can see, so some profit taking a double or triple top pullback could ensue, and maybe we'll see a big handle form (red arrow) off that large cup? That's possible, or it could breakout since this would be a triple top which are less likely to hold than a double top.
The weekly S&P 500 chart improved last week with its highest close, and first close above 4200 since last August. It has taken out resistance repeatedly this year and it now sits near the middle of that red rising channel.
If a deal isn't done we know it won't be good for the stock market, but even if a deal is done, with the S&P 500 at new 2023 there's certainly a chance for a sell the news reaction. If the bulls have an argument, besides new highs, it's that the average investors hold a lot of cash and much of the rally has been triggered by bots and program trading. At some point mom and pop may catch some FOMO and want to dive back in, so there is some ammunition to keep this moving higher - if a deal is done.
The S&P 500 (C-fund) pulled back early in the week, found support at the 50-day EMA again, and on Friday it closed at a 9-month high, but still in that 4200 area where some think resistance lingers. The rising channel (red) looks pretty good but the bulls really want it to hold above that old resistance line near 4200. However, as we have seen often this, those large candlesticks can get retraced rather quickly.
The DWCPF (S-fund) led the TSP funds on Friday with a 1.47% gain, jumped back above the 50-day EMA, and filled the open gap from Wednesday in the process. It remains in that channel which is either a long bottoming process - or a nasty looking bear flag.
BND (Bonds / F-fund) found support at the 200-day moving average late last week and rallied for a rare up day after falling precipitously for nearly 3-weeks. If the 200-day MA fails than the large open gap below 71.75 is a possible downside target.
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 so much 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="width: 338, align: center"] Daily TSP Funds Return
[TR]
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May has been a very interesting month for the stock market. The action has been very choppy and with the strong rally in the dollar and Treasury yields, the I-fund and the F-fund have been tumbling, so it has been a mixed bag for the various TSP funds. With the debt ceiling likely being lifted yet again, the issuance of new bonds and increase in debt has created this situation, but as I asked above, will this all change after a deal is finally inked in?
The rally in the 10-year Yield Treasury Note has the F-fund down more than 2% this month. We did see a bit of a negative reversal in yields on Friday as talks of a deal were circulating. The 10-year yield nearly filled that open gap before backing off, so maybe it is time for a snap back rally in bonds and the F-fund?
The EFA (I-fund) has been lagging but maybe with the dollar testing overhead resistance, there will be some kind of exhale if or when a deal is signed.
The I-fund has been lagging badly this month because of the dollar's strength, and that is despite the I-fund biggest holdings are making new multi-year highs. It may be trying to find support in that 72 area.
Japanese stocks are still the largest holding in the I-fund with 22% of the fund invested in the Japanese stock market, or 235 different companies. The UK is second at 15% with 82 companies. The reason I bring this up is because the Japanese stock market has been on fire this year. Unfortunately for anyone in the I-fund fund recently, the strength in the dollar has been holding it back despite the strength in this market.
There is some resistance near last week's high on The Japanese Nikkei Average as you can see, so some profit taking a double or triple top pullback could ensue, and maybe we'll see a big handle form (red arrow) off that large cup? That's possible, or it could breakout since this would be a triple top which are less likely to hold than a double top.
The weekly S&P 500 chart improved last week with its highest close, and first close above 4200 since last August. It has taken out resistance repeatedly this year and it now sits near the middle of that red rising channel.
If a deal isn't done we know it won't be good for the stock market, but even if a deal is done, with the S&P 500 at new 2023 there's certainly a chance for a sell the news reaction. If the bulls have an argument, besides new highs, it's that the average investors hold a lot of cash and much of the rally has been triggered by bots and program trading. At some point mom and pop may catch some FOMO and want to dive back in, so there is some ammunition to keep this moving higher - if a deal is done.
The S&P 500 (C-fund) pulled back early in the week, found support at the 50-day EMA again, and on Friday it closed at a 9-month high, but still in that 4200 area where some think resistance lingers. The rising channel (red) looks pretty good but the bulls really want it to hold above that old resistance line near 4200. However, as we have seen often this, those large candlesticks can get retraced rather quickly.
The DWCPF (S-fund) led the TSP funds on Friday with a 1.47% gain, jumped back above the 50-day EMA, and filled the open gap from Wednesday in the process. It remains in that channel which is either a long bottoming process - or a nasty looking bear flag.
BND (Bonds / F-fund) found support at the 200-day moving average late last week and rallied for a rare up day after falling precipitously for nearly 3-weeks. If the 200-day MA fails than the large open gap below 71.75 is a possible downside target.
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 so much 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.
