The new week started where the prior week ended, with more gains. The Dow closed over 38,000 for the first time ever, but the three big indices actually peaked early yesterday and then floundered and moved sideways for the rest of the day. Meanwhile small caps, which had been left behind this year, took charge yesterday and the Russell 2000 gained about 2%, and the S-fund gained 1.5%. Bonds were up modestly as yields slipped but the 10-year yield found support at a key level.
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The surprise rally on expiration Friday followed through into Monday's open but it didn't take long to see either some profit taking in the major indices, or was it the bears outright selling this breakout in the S&P 500? Stocks don't go straight up but the bulls may want to see that old resistance line act as support on any pullback. The negative reversal could proceed some kind of negative retracement of Friday's large candlestick, but this chart below is more focused on the difference between the three TSP stock funds.
We got the breakout in the S&P 500 (C-fund) on Friday and it held yesterday, but there's room for retracement as I said. The 2nd chart is the S-fund and it is still a long way from the December highs, but that was a pretty good breakout from a wedge-like, or even bull flag, formation on Monday.
And the I-fund chart has a couple of trends going with a fake out in each direction. It would need to stay over 74 to push above that red resistance line, which looks like the top end of a bull flag. Or, if it fails again, there's some immediate support in the 73.75 area, which would have to hold or the bottom of the red bull flag could get tested again.
The dollar also plays a big role in the I-fund as a strong dollar will put pressure on the price of the I-fund, and a weak dollar will put a wind at its back. It is currently in the process of consolidating after a big gap up last Monday. Consolidations obviously break at some point, and usually with vigor, but will it be down to fill the open gap below and retest the 50-day EMA, or will it be up to keep the rally going?
The 10-year Treasury Yield was down yesterday, but the 200-day EMA held firmly so there may be a little battle between those two moving averages. The GDP report on Thursday and PCE Prices report on Friday will likely help push it through one of those averages, if something doesn't cause the move in the interim.
The Dow Transportation Index was a big winner yesterday gaining 2.2% on the day and, after the bell United Airlines was up big after reporting earnings and if that holds, it could help the index test the December highs.
The price of oil is up testing its 50-day EMA and closed just above it for the first time since October. This could be where it gets tough, and could be a tell for the economy.
We got a "Titanic Syndrome" signal warning recently but in recent years a single signal hasn't meant a whole lot. It's when we get a series of them that we have to be on our toes, so I'll be keeping an eye on this and post more info if anything interesting develops.
From sentimenTrader.com: "The Titanic Syndrome was created by Bill Omaha in the 1960s. It highlights a technical market condition when stocks have recently been at a high, and then there is a sudden jump in new 52-week lows versus highs on the NYSE. For our purposes, we use the following conditions: 1) The S&P 500 closed at a 52-week high at some point in the past 7 sessions, and 2) New 52-week lows outnumber 52-week highs on the NYSE. It is a warning sign that typically precedes trouble over the next 1-3 months."
The S&P 500 (C-fund) opened higher yesterday, peaked early, then rolled over. It closed with modest gains but the negative reversal may be telling us that it may want to retrace Friday's large breakout candlestick. At this point, as long as 4800 holds, the bulls remain in charge. Despite being an options expiration Friday, there wasn't a spike in trading volume on the breakout last Friday and that's a little concerning as it could mean larger institutions weren't doing a lot of buying.
DWCPF (S-fund) gapped up on Monday as if someone finally flipped a switch on the small cap buying, which had been lagging badly all year. It's a nice looking bullish flag breakout, but it did leave an open gap in its wake, which could be an eventual pullback target.
The EFA (I-fund) was up but it failed to break above what could have been a bull flag, although I am taking a little liberty with that top resistance line. I am going by the bottom of the flag to help draw the top, and that makes the prior failed attempt a fake out. It did close above the 20-day EMA for the first time since that failed breakout.
BND (F-fund) was up slightly yesterday although it failed to hold the highs and the 20-day EMA, but this too has a nice looking bullish flag which should be hinting that a breakout to the upside is very possible.
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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[TD="width: 338, align: center"] Daily TSP Funds Return
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The surprise rally on expiration Friday followed through into Monday's open but it didn't take long to see either some profit taking in the major indices, or was it the bears outright selling this breakout in the S&P 500? Stocks don't go straight up but the bulls may want to see that old resistance line act as support on any pullback. The negative reversal could proceed some kind of negative retracement of Friday's large candlestick, but this chart below is more focused on the difference between the three TSP stock funds.
We got the breakout in the S&P 500 (C-fund) on Friday and it held yesterday, but there's room for retracement as I said. The 2nd chart is the S-fund and it is still a long way from the December highs, but that was a pretty good breakout from a wedge-like, or even bull flag, formation on Monday.
And the I-fund chart has a couple of trends going with a fake out in each direction. It would need to stay over 74 to push above that red resistance line, which looks like the top end of a bull flag. Or, if it fails again, there's some immediate support in the 73.75 area, which would have to hold or the bottom of the red bull flag could get tested again.
The dollar also plays a big role in the I-fund as a strong dollar will put pressure on the price of the I-fund, and a weak dollar will put a wind at its back. It is currently in the process of consolidating after a big gap up last Monday. Consolidations obviously break at some point, and usually with vigor, but will it be down to fill the open gap below and retest the 50-day EMA, or will it be up to keep the rally going?
The 10-year Treasury Yield was down yesterday, but the 200-day EMA held firmly so there may be a little battle between those two moving averages. The GDP report on Thursday and PCE Prices report on Friday will likely help push it through one of those averages, if something doesn't cause the move in the interim.
The Dow Transportation Index was a big winner yesterday gaining 2.2% on the day and, after the bell United Airlines was up big after reporting earnings and if that holds, it could help the index test the December highs.
The price of oil is up testing its 50-day EMA and closed just above it for the first time since October. This could be where it gets tough, and could be a tell for the economy.
We got a "Titanic Syndrome" signal warning recently but in recent years a single signal hasn't meant a whole lot. It's when we get a series of them that we have to be on our toes, so I'll be keeping an eye on this and post more info if anything interesting develops.
From sentimenTrader.com: "The Titanic Syndrome was created by Bill Omaha in the 1960s. It highlights a technical market condition when stocks have recently been at a high, and then there is a sudden jump in new 52-week lows versus highs on the NYSE. For our purposes, we use the following conditions: 1) The S&P 500 closed at a 52-week high at some point in the past 7 sessions, and 2) New 52-week lows outnumber 52-week highs on the NYSE. It is a warning sign that typically precedes trouble over the next 1-3 months."
The S&P 500 (C-fund) opened higher yesterday, peaked early, then rolled over. It closed with modest gains but the negative reversal may be telling us that it may want to retrace Friday's large breakout candlestick. At this point, as long as 4800 holds, the bulls remain in charge. Despite being an options expiration Friday, there wasn't a spike in trading volume on the breakout last Friday and that's a little concerning as it could mean larger institutions weren't doing a lot of buying.
DWCPF (S-fund) gapped up on Monday as if someone finally flipped a switch on the small cap buying, which had been lagging badly all year. It's a nice looking bullish flag breakout, but it did leave an open gap in its wake, which could be an eventual pullback target.
The EFA (I-fund) was up but it failed to break above what could have been a bull flag, although I am taking a little liberty with that top resistance line. I am going by the bottom of the flag to help draw the top, and that makes the prior failed attempt a fake out. It did close above the 20-day EMA for the first time since that failed breakout.
BND (F-fund) was up slightly yesterday although it failed to hold the highs and the 20-day EMA, but this too has a nice looking bullish flag which should be hinting that a breakout to the upside is very possible.
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.
