The very interesting action continues, whether its more rotation from sector to sector, or a more narrowed rally as you'll see in some of the charts below. The Dow had a triple digit gain of +104-points, while the S&P 500, Nasdaq, and large tech Nasdaq 100 all closed at new all time highs. Small caps lagged again, oil was down sharply, and the yield on the 10-year took another turn for the worse - which was good for the F-fund.
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The feel of the stock and bond markets may have been different yesterday, depending where you were looking. The big shiny objects like Amazon, Apple, the S&P 500 and Nasdaq, all looked good making new highs, but under the surface we see some issues. I've talked about the negative divergences in some indicators before, but yesterday, even with the new highs in the S&P and Naz, the volume breadth was quite negative on both the NYSE and the Nasdaq. The Nasdaq also saw 2 declining issues for every one advancing, and it had over 100 new 52-lows, which was well above recent readings, and odd given the positive close to new highs.
I keep talking about the Yield on the 10-year, which is obviously important to the F-fund as that fund moves counter to yields, but to see 5-month lows in the yield in an economy that is supposed to be growing an enormous rate coming off the covid crash, seems way out of whack. This chart looks more like what it would look like with an economy that is in trouble.
The price of oil pulled back for a second day, after making a new multi-year high in the overnight trading early on Tuesday. Typically, not always, yields will move in unison with the price of oil as both can be a measure of economic strength. We can see in the chart that they generally do move in the same direction, but more recently oil (top chart) has continued to rally while the 10-year yield (lower) has rolled over in recent months.
Now, this week, oil started to pull back as it had one of its worst two day sell offs of the year. A rally in the dollar added to the weakness and we could give an excuse that disarray within OPEC about production output may be causing this short-term hiccup for oil, but it is still near multi-year highs and we are seeing gasoline prices going up every week. AAA is anticipating another 20 cent rise in gas prices by August.
The S&P 500 (C-fund) tagged another new high as big tech continues to push the large cap indices higher. You can see that it is brushing up against some overhead resistance now but the channels are all still rising, as is the resistance. We have seen enough negative differences to be concerned, but so far the S&P 500 has gotten through it unscathed.
The DWCPF (S-fund) was down sharply yesterday and this time it did fall through a couple of layers of support. It held at the prior test of the 50-day EMA, so perhaps that is where it will find support on this pullback, but the Russell 2000 chart below the DWCPF just fell below its 50-day average and a rising support line. Many other things seem to be working so is this the canary in the coal mine?
The EFA (I-fund) rallied yesterday despite the move higher in the dollar, but the chart has some issues with these bear flags. It did close back above the 50-day EMA so buyers did step up at a possible double bottom after the pullback.
The Transportation Index also rallied but like the EFA above, the bear flag looms large.
BND (bonds / F-fund) rallied and is enjoying this sell off in yields. This started the year above 87 so it may be trying to erase the 2021 losses for bonds and the F-fund, which is now down less than 1% for the year for the first time in a while.
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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The feel of the stock and bond markets may have been different yesterday, depending where you were looking. The big shiny objects like Amazon, Apple, the S&P 500 and Nasdaq, all looked good making new highs, but under the surface we see some issues. I've talked about the negative divergences in some indicators before, but yesterday, even with the new highs in the S&P and Naz, the volume breadth was quite negative on both the NYSE and the Nasdaq. The Nasdaq also saw 2 declining issues for every one advancing, and it had over 100 new 52-lows, which was well above recent readings, and odd given the positive close to new highs.
I keep talking about the Yield on the 10-year, which is obviously important to the F-fund as that fund moves counter to yields, but to see 5-month lows in the yield in an economy that is supposed to be growing an enormous rate coming off the covid crash, seems way out of whack. This chart looks more like what it would look like with an economy that is in trouble.
The price of oil pulled back for a second day, after making a new multi-year high in the overnight trading early on Tuesday. Typically, not always, yields will move in unison with the price of oil as both can be a measure of economic strength. We can see in the chart that they generally do move in the same direction, but more recently oil (top chart) has continued to rally while the 10-year yield (lower) has rolled over in recent months.
Now, this week, oil started to pull back as it had one of its worst two day sell offs of the year. A rally in the dollar added to the weakness and we could give an excuse that disarray within OPEC about production output may be causing this short-term hiccup for oil, but it is still near multi-year highs and we are seeing gasoline prices going up every week. AAA is anticipating another 20 cent rise in gas prices by August.
The S&P 500 (C-fund) tagged another new high as big tech continues to push the large cap indices higher. You can see that it is brushing up against some overhead resistance now but the channels are all still rising, as is the resistance. We have seen enough negative differences to be concerned, but so far the S&P 500 has gotten through it unscathed.
The DWCPF (S-fund) was down sharply yesterday and this time it did fall through a couple of layers of support. It held at the prior test of the 50-day EMA, so perhaps that is where it will find support on this pullback, but the Russell 2000 chart below the DWCPF just fell below its 50-day average and a rising support line. Many other things seem to be working so is this the canary in the coal mine?
The EFA (I-fund) rallied yesterday despite the move higher in the dollar, but the chart has some issues with these bear flags. It did close back above the 50-day EMA so buyers did step up at a possible double bottom after the pullback.
The Transportation Index also rallied but like the EFA above, the bear flag looms large.
BND (bonds / F-fund) rallied and is enjoying this sell off in yields. This started the year above 87 so it may be trying to erase the 2021 losses for bonds and the F-fund, which is now down less than 1% for the year for the first time in a while.
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.
