So far it has been typical light volume, bullish biased, holiday trading week and the lack of any negative headlines could keep it going. Stocks chopped around between positive and negative territory yesterday and a last minute surge higher pushed the indices into positive territory at the close. The Dow gained 111-points, posting a solid gain while the broader indices were more flat. The I-fund had a good day as the dollar got slammed again. Bonds were up as yields continue to slide lower.
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It seems obvious that the bulls, or the powers that be, want to see the S&P 500 test the 2021 highs before the year is up, and it's a stone's throw away at this point, but the index still needs to get just above 4800.
Double tops can trigger pullbacks, and if this was not the end of the year with the start of a New Year next week, I'd say this is a slam dunk short-term (at least) selling opportunity, but since it is a new year coming up and the first few days of a new year set the tone for the entire year, it may not be that easy of a call.
I pointed out in yesterday's commentary called Stocks rallying like it's 1999, that the recent activity is mimicking 1999's end of year action, and things got very different when new year started. That was a different time and the world was a different place, but from a technical analysis standpoint, a double top pullback would not be a surprise.
We aren't really seeing many warnings signs except for the extreme moves the indices have made over the last 2+ months. Is that enough to warrant concern? Maybe in the short-term, but I think we will know a lot more after next week when the January Barometer gives us some clues. That is, as goes January, so goes the year. And, as goes the first week in January, so goes January, hence so goes the year. Generally.
Almost everything was up or flat yesterday, but that's not news during this holiday week. What may be news is what was down; the economically sensitive price of oil rolled over after tagging some overhead resistance. That keeps the descending trend down. That's good for consumers, but perhaps a telling sign for the economy in 2024 as demand tends to dwindle during weaker economic periods and perhaps the negative trend off the September high is front running that possibility.
The Dow Transportation Index was also down yesterday, but it certainly has not been in a downtrend.
But the longer term chart is coming up against some overhead resistance and if it stalls out before reaching the summer highs, it may create a lower high. It's too early to say, but this is one of the major market leaders so it needs to make a new high to confirm the new highs in the other major indices, assuming they do make new highs in the coming days.
Are you on the TSP Talk AutoTracker? If not, now is the time to get in for 2024! It's free and prizes are given monthly and annually for the best performers. More information: [url]https://www.tsptalk.com/get_started_autotracker.php
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As the S&P 500 (C-fund) nears its 2021 highs (see weekly chart in top section) the trading channel off the October lows has started to look more like a wedge with the apex narrowing. This suggests either a major breakout, or more likely (famous last words) some backing and filling once it hits that double top. There's no rule that double tops have to hold and cause a pullback, just as there's no rule that says it has to go back and fill in some of those open gaps. But history is certainly on the side of the more typical market action. What could happen is that we get a breakout, which could see the few remaining bears capitulate and buy, and that would almost certainly be the breaking point for the rally.
EFA (I-fund) has been taking advantage of the relentless weakness in the dollar. The dollar even fell below some support yesterday.
That is meaningful since lately the market is taking its cues from the dollar. That's not always the case, but that's the current trend - stocks are moving counter to the dollar.
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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It seems obvious that the bulls, or the powers that be, want to see the S&P 500 test the 2021 highs before the year is up, and it's a stone's throw away at this point, but the index still needs to get just above 4800.
Double tops can trigger pullbacks, and if this was not the end of the year with the start of a New Year next week, I'd say this is a slam dunk short-term (at least) selling opportunity, but since it is a new year coming up and the first few days of a new year set the tone for the entire year, it may not be that easy of a call.
I pointed out in yesterday's commentary called Stocks rallying like it's 1999, that the recent activity is mimicking 1999's end of year action, and things got very different when new year started. That was a different time and the world was a different place, but from a technical analysis standpoint, a double top pullback would not be a surprise.
We aren't really seeing many warnings signs except for the extreme moves the indices have made over the last 2+ months. Is that enough to warrant concern? Maybe in the short-term, but I think we will know a lot more after next week when the January Barometer gives us some clues. That is, as goes January, so goes the year. And, as goes the first week in January, so goes January, hence so goes the year. Generally.
Almost everything was up or flat yesterday, but that's not news during this holiday week. What may be news is what was down; the economically sensitive price of oil rolled over after tagging some overhead resistance. That keeps the descending trend down. That's good for consumers, but perhaps a telling sign for the economy in 2024 as demand tends to dwindle during weaker economic periods and perhaps the negative trend off the September high is front running that possibility.
The Dow Transportation Index was also down yesterday, but it certainly has not been in a downtrend.
But the longer term chart is coming up against some overhead resistance and if it stalls out before reaching the summer highs, it may create a lower high. It's too early to say, but this is one of the major market leaders so it needs to make a new high to confirm the new highs in the other major indices, assuming they do make new highs in the coming days.
Are you on the TSP Talk AutoTracker? If not, now is the time to get in for 2024! It's free and prizes are given monthly and annually for the best performers. More information: [url]https://www.tsptalk.com/get_started_autotracker.php
[/URL]
As the S&P 500 (C-fund) nears its 2021 highs (see weekly chart in top section) the trading channel off the October lows has started to look more like a wedge with the apex narrowing. This suggests either a major breakout, or more likely (famous last words) some backing and filling once it hits that double top. There's no rule that double tops have to hold and cause a pullback, just as there's no rule that says it has to go back and fill in some of those open gaps. But history is certainly on the side of the more typical market action. What could happen is that we get a breakout, which could see the few remaining bears capitulate and buy, and that would almost certainly be the breaking point for the rally.
EFA (I-fund) has been taking advantage of the relentless weakness in the dollar. The dollar even fell below some support yesterday.
That is meaningful since lately the market is taking its cues from the dollar. That's not always the case, but that's the current trend - stocks are moving counter to the dollar.
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.
