It was more of the same on Tuesday for big tech which led the way again. They couldn't keep up but at least the small caps and I-fund posted modest gains this time. The momentum remains strong and we even had new closing highs on the S&P 500 and Nasdaq again yesterday. So is the divergence an opportunity for the smaller stocks or is it a warning sign for the entire market?
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This is a holiday week so the direction of these moves may or may not be telling the story because of the propensity for pre / post holiday reversals. But new highs has been the story for a while in those large cap indices so where's the reversal?
As for the internals, we did see some broader gains with 2 to 1 advancers over decliners in the NYSE, but those Nasdaq numbers are suspect. The Nasdaq was up 149-points, or 0.84%, which led the market indices and pushed it to a new all-time high, but breadth was only modestly positive and there were 211 new 52-lows vs. just 69 stocks making new highs. That's odd.
I'm not completely bearish yet, and I do own a lot of stock right now, but these numbers are a little alarming. Remember, Friday ended with a major negative reversal day so this week's rally seems suspect and if wasn't for the holiday week, what might really be happening?
On the other hand, indicators like the CNN Fear & Greed are not showing any major concerns like complacently or euphoria. It's smack in the middle between fear and greed in neutral territory right now - even though we're seeing new all time highs. I would believe this if it was a "smart money" indicator, but it's more of a "dumb money" indicator so mom and pop investors are not overly enthused, so maybe there is more upside to go? The market would prefer to pull more people in before it corrects.
We saw a pullback in yields yesterday after the 2-day, debate influenced, pop higher. There's open gaps on both sides so the short-term move could just be some house cleaning. Plus it's a holiday week and it's tough to trust anything with any conviction.
The dollar pulled back but remains near recent highs, although it did fall below the rising trading channel. Pre-holiday reversal?
I posted this in the forum yesterday showing that when the price of oil has been moving over the $84 area, the stock market gets a little cranky. This chart is from COB on July 1st but oil hit $84.38 at the highs yesterday before pulling back again and closing at 82.81, so it is dancing near the potential warning zone.
We'll get the jobs report on Friday and estimates are expecting to see a gain of about 170K to 185K jobs for June and an unemployment rate of 4.0%.
I don't know how many folks are actually paying attention this week as it's a big week for vacations, so I will post a very quick commentary on Friday, unless some major unfolds in the interim.
From tsp.gov: "Some financial markets will be closed on Thursday, July 4, in observance of Independence Day. The Thrift Savings Plan will also be closed. Transactions that would have been processed Thursday night (July 4) will be processed Friday night (July 5) at Friday’s closing share prices."
The June AutoTracker winners have been posted and it was tough to beat that C-fund. Just two did it. Here are the winners and here are the monthly and annual (non-premium members) standings through June. Track your return on the AutoTracker - it's free!
The S&P 500 (C-fund) was supposed to pull back this week after Friday nasty negative reversal day. However, Friday was the end of the quarter and this week is a holiday week, so I think we're all just going along for some kind of ride, and we may not know the direction this market wants to go until next week. If we ignore the negative reversal, we actually have a bull flag forming and those are bullish. The chart looks good, the seasonality is favorable, but don't let your guard down for too long.
The S-fund (DWCPF) was up yesterday but lagged again. The modest rally was only able to push this back up to its 36-day EMA, which seems to have some significance on this chart. There were a couple of failed attempts at a breakout above it. Zooming out there is actually a bullish looking inverted head and shoulders forming, but that means it has to get over that 36-day average first.
The EFA (I-fund) was up but also lagged the large caps. This chart has some issues with the bear flag formed. There is an open gap above and below so flip a coin to see which one gets filled first. The one below would be filled if the bear flag plays out the way they normally do.
BND (bonds / F-fund) bounced back to try to fill in Monday's open gap. There's another gap all the way down near 71, but it would have to fail at the bottom of the blue ascending channel to fill it. The 50-day EMA also held, so for now the bulls have some control here.
Thanks so much for reading! Enjoy the holiday, and we'll be back on Friday with a quick commentary.
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
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
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.
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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This is a holiday week so the direction of these moves may or may not be telling the story because of the propensity for pre / post holiday reversals. But new highs has been the story for a while in those large cap indices so where's the reversal?
As for the internals, we did see some broader gains with 2 to 1 advancers over decliners in the NYSE, but those Nasdaq numbers are suspect. The Nasdaq was up 149-points, or 0.84%, which led the market indices and pushed it to a new all-time high, but breadth was only modestly positive and there were 211 new 52-lows vs. just 69 stocks making new highs. That's odd.
I'm not completely bearish yet, and I do own a lot of stock right now, but these numbers are a little alarming. Remember, Friday ended with a major negative reversal day so this week's rally seems suspect and if wasn't for the holiday week, what might really be happening?
On the other hand, indicators like the CNN Fear & Greed are not showing any major concerns like complacently or euphoria. It's smack in the middle between fear and greed in neutral territory right now - even though we're seeing new all time highs. I would believe this if it was a "smart money" indicator, but it's more of a "dumb money" indicator so mom and pop investors are not overly enthused, so maybe there is more upside to go? The market would prefer to pull more people in before it corrects.
We saw a pullback in yields yesterday after the 2-day, debate influenced, pop higher. There's open gaps on both sides so the short-term move could just be some house cleaning. Plus it's a holiday week and it's tough to trust anything with any conviction.
The dollar pulled back but remains near recent highs, although it did fall below the rising trading channel. Pre-holiday reversal?
I posted this in the forum yesterday showing that when the price of oil has been moving over the $84 area, the stock market gets a little cranky. This chart is from COB on July 1st but oil hit $84.38 at the highs yesterday before pulling back again and closing at 82.81, so it is dancing near the potential warning zone.
We'll get the jobs report on Friday and estimates are expecting to see a gain of about 170K to 185K jobs for June and an unemployment rate of 4.0%.
I don't know how many folks are actually paying attention this week as it's a big week for vacations, so I will post a very quick commentary on Friday, unless some major unfolds in the interim.
From tsp.gov: "Some financial markets will be closed on Thursday, July 4, in observance of Independence Day. The Thrift Savings Plan will also be closed. Transactions that would have been processed Thursday night (July 4) will be processed Friday night (July 5) at Friday’s closing share prices."
The June AutoTracker winners have been posted and it was tough to beat that C-fund. Just two did it. Here are the winners and here are the monthly and annual (non-premium members) standings through June. Track your return on the AutoTracker - it's free!
The S&P 500 (C-fund) was supposed to pull back this week after Friday nasty negative reversal day. However, Friday was the end of the quarter and this week is a holiday week, so I think we're all just going along for some kind of ride, and we may not know the direction this market wants to go until next week. If we ignore the negative reversal, we actually have a bull flag forming and those are bullish. The chart looks good, the seasonality is favorable, but don't let your guard down for too long.
The S-fund (DWCPF) was up yesterday but lagged again. The modest rally was only able to push this back up to its 36-day EMA, which seems to have some significance on this chart. There were a couple of failed attempts at a breakout above it. Zooming out there is actually a bullish looking inverted head and shoulders forming, but that means it has to get over that 36-day average first.
The EFA (I-fund) was up but also lagged the large caps. This chart has some issues with the bear flag formed. There is an open gap above and below so flip a coin to see which one gets filled first. The one below would be filled if the bear flag plays out the way they normally do.
BND (bonds / F-fund) bounced back to try to fill in Monday's open gap. There's another gap all the way down near 71, but it would have to fail at the bottom of the blue ascending channel to fill it. The 50-day EMA also held, so for now the bulls have some control here.
Thanks so much for reading! Enjoy the holiday, and we'll be back on Friday with a quick commentary.
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
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
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.
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.
