After a weak open caused by a surprisingly strong retail sales report, the Dow eked out a small gain and the other indices closed well off their lows. The broader indices were mixed with weakness in big tech yesterday, but there was strength in the small caps as the economy data continues to surprise on the upside, although that's also pushing up bond yields.
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Retail sales sent the stock futures sharply lower before the opening bell, and not because the numbers were bad. The report beat estimates and were quite strong. The better than expected data sent yields higher but the stocks market came around to embrace the strong economic data, and oddly enough, the retail index was down on the day.
The 10-year Treasury yield made a new closing high as it flirts with that intraday reversal high earlier this month. The trend is still up as it approaches the overhead resistance line, but there are now two open gaps below that could be pullback targets.
The S-fund is one of the most popular funds with our aggressive members so I like to keep a close eye on the the Russell 2000. It is NOT our S-fund but it moves in a similar direction, it is considered a market leader, and it is very sensitive to economic conditions . The recent strength over the last two days has been encouraging and surprisingly it is higher yields that may be the catalyst. Well, that's the tail wagging the dog because it's the stronger economic data that is pushing yields higher, and economic growth is a catalyst for small caps.
Also, higher yields helped bank stocks and if you recall the negative influence that the smaller regional banks had on the small caps and S-fund last March, it's not surprising that we see regional banks rallying, which is helping these small cap indices. However, you can see that the KRE chart above is hitting some resistance like many of the other index charts.
I mentioned High Yield Corporate Bond Funds yesterday (OK, stop yawning) and again yesterday they were down sharply and it could be a warning sign. Not a certainty, but something to watch.
After the closing bell tonight we will get earnings from Netflix and Tesla. Not generally huge market movers but they can move the Nasdaq and Tesla will be the first of the "Magnificent Seven" companies to report: The others are Nvidia (NVDA), Meta Platforms (META), Amazon.com (AMZN), Microsoft (MSFT), Apple (AAPL), and Alphabet (GOOGL).
The S&P 500 (C-fund) moved above the 50-day EMA again yesterday, but once again it failed to close above it. All of that knocking on the overhead resistance may have created a bullish looking flag (blue.) It came so close to filling that open gap near 4400, but once again it came up short. With earnings season coming up, we could get the catalyst to either breakout above the descending trading channel, or buy a ticket back to the bottom of it.
DWCPF (S-fund, small caps) led the way yesterday for second straight day, but it is battling the resistance that every chart technicians can obviously see. The inverted head and shoulders formed off the lows looks promising, but will the resistance be too formidable?
The EFA (I-fund) was slightly higher higher, but it depends where the TSP prices it after the EFA was fairly flat. The chart looks similar to the DWCPF S-fund chart above in that there is a small inverted head and shoulders pattern formed with a lot resistance to deal with overhead.
BND (bonds / F-fund) gapped lower, filling in that blue gap, and that was something we thought could happen - a gap fill and a test of the lows. The question is, what now? This could be a double bottom low, or the start of a melt down. Place your bets! I'm leaning toward a low, but that's betting against the trend so it is risky. (I don't own any F-fund right now.)
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
Daily Market Commentary Archives
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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Retail sales sent the stock futures sharply lower before the opening bell, and not because the numbers were bad. The report beat estimates and were quite strong. The better than expected data sent yields higher but the stocks market came around to embrace the strong economic data, and oddly enough, the retail index was down on the day.
The 10-year Treasury yield made a new closing high as it flirts with that intraday reversal high earlier this month. The trend is still up as it approaches the overhead resistance line, but there are now two open gaps below that could be pullback targets.
The S-fund is one of the most popular funds with our aggressive members so I like to keep a close eye on the the Russell 2000. It is NOT our S-fund but it moves in a similar direction, it is considered a market leader, and it is very sensitive to economic conditions . The recent strength over the last two days has been encouraging and surprisingly it is higher yields that may be the catalyst. Well, that's the tail wagging the dog because it's the stronger economic data that is pushing yields higher, and economic growth is a catalyst for small caps.
Also, higher yields helped bank stocks and if you recall the negative influence that the smaller regional banks had on the small caps and S-fund last March, it's not surprising that we see regional banks rallying, which is helping these small cap indices. However, you can see that the KRE chart above is hitting some resistance like many of the other index charts.
I mentioned High Yield Corporate Bond Funds yesterday (OK, stop yawning) and again yesterday they were down sharply and it could be a warning sign. Not a certainty, but something to watch.
After the closing bell tonight we will get earnings from Netflix and Tesla. Not generally huge market movers but they can move the Nasdaq and Tesla will be the first of the "Magnificent Seven" companies to report: The others are Nvidia (NVDA), Meta Platforms (META), Amazon.com (AMZN), Microsoft (MSFT), Apple (AAPL), and Alphabet (GOOGL).
The S&P 500 (C-fund) moved above the 50-day EMA again yesterday, but once again it failed to close above it. All of that knocking on the overhead resistance may have created a bullish looking flag (blue.) It came so close to filling that open gap near 4400, but once again it came up short. With earnings season coming up, we could get the catalyst to either breakout above the descending trading channel, or buy a ticket back to the bottom of it.
DWCPF (S-fund, small caps) led the way yesterday for second straight day, but it is battling the resistance that every chart technicians can obviously see. The inverted head and shoulders formed off the lows looks promising, but will the resistance be too formidable?
The EFA (I-fund) was slightly higher higher, but it depends where the TSP prices it after the EFA was fairly flat. The chart looks similar to the DWCPF S-fund chart above in that there is a small inverted head and shoulders pattern formed with a lot resistance to deal with overhead.
BND (bonds / F-fund) gapped lower, filling in that blue gap, and that was something we thought could happen - a gap fill and a test of the lows. The question is, what now? This could be a double bottom low, or the start of a melt down. Place your bets! I'm leaning toward a low, but that's betting against the trend so it is risky. (I don't own any F-fund right now.)
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
Daily Market Commentary Archives
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.
