Negative news puts the kibosh on what was developing as a breakout day for some stock indices. Trump said he was ending the White House's stimulus negotiations until after the election and we saw solid gains, and some breakouts, come tumbling down in the blink of an eye. The Dow turned a 200+ point gain into a 376-point loss in about 10 minutes. The small caps held up better than large caps but they had a huge gain before the president's announcement.
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It came out of nowhere but as you know and I've said repeatedly, I certainly wasn't confident that a deal was going to be made, but I was somewhat encouraged by Wall Street's apparent optimism before yesterday.
The result of the breakdown in negotiations was a series of failed breakouts as we'll see in the charts. I don't know yet if this is a deal breaker (pun intended) for the stock market, or if it's just some technical backing and filling after Monday' big rally. I suppose if the recent rally was all being driven by the potential stimulus package, then it may be a deal breaker.
Again, pardon the politics, but that is what is driving the market at the moment. I would have to think that the president has something else up his sleeve because this seems like this could be a political problem for him. We know there is a very small percentage of undecided voters out there, and many of them have 401K's so, right or wrong, having the market tank right before the elections won't garner any favors from them.
Here's where we are:
Another headline yesterday on CNBC, "House Democrats say Facebook, Amazon, Alphabet, Apple enjoy ‘monopoly power’ and recommend big changes" didn't help the big tech stocks, adding to the sell-off, after the House Judiciary subcommittee on antitrust released its findings and recommendations.
Internally the numbers were negative, completely reversing the positive early numbers.
The selling action obviously included a lot of emotional knee-jerk selling, so I guess in the coming days when investors have time to think about this, we'll find out just how much the market had already priced in a deal. As I said, I wasn't optimistic, and I assumed the market was rallying because it was. I guess we'll find out because here's another dip for the dip buyers if they want it.
The S&P 500 (C-fund) was putting some finishing touches on a bullish looking inverted ahead and shoulders pattern, and looked primed for a breakout above the neckline before the news of the negotiations breakdown yesterday. Isn't it interesting how news seems to come out at pivotal points on the chart?
A close up shows that the S&P did find some support at the 20-day EMA, although that just could be a one day holding point, as is sometimes the case. But this chart also shows the filling of one of those "stealth gaps" (red box) which was the area between Friday's closing price and Monday's low. So, it wasn't the worst place for the S&P 500 to pull back to, but the bears have another day to try to push it lower, and potentially fill the open gap by 3307 (blue.)
The DWCPF (S-fund) made a new all-time high yesterday and was was on its way to a new record closing high before the reversal. Those pesky open gaps, which didn't look like much of a concern in the early trading yesterday, are now back in the picture - at least the one from Monday near 1580, anyway.
The EFA (I-fund) had just filled its overhead gap and the lower gap on consecutive days (blue). Yesterday it decided to fill in yet another open gap (red). Three gaps filled in three directions (down, up, down) in three consecutive days. I'm not sure I remember ever seeing that before.
Several times yesterday I posted in the forum these great technical developments that we were seeing in the charts. The move above some of the sticky resistance on the Dow Transportation Index was on its way to being broken... before the reversal.
BND (F-fund) may have put in a turning point. That spinning top pattern tends to come at indecision areas and often precedes a reversal. That's what the chart says, if you think yesterday's reversal was serious and not a temporary emotional move.
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
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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It came out of nowhere but as you know and I've said repeatedly, I certainly wasn't confident that a deal was going to be made, but I was somewhat encouraged by Wall Street's apparent optimism before yesterday.
The result of the breakdown in negotiations was a series of failed breakouts as we'll see in the charts. I don't know yet if this is a deal breaker (pun intended) for the stock market, or if it's just some technical backing and filling after Monday' big rally. I suppose if the recent rally was all being driven by the potential stimulus package, then it may be a deal breaker.
Again, pardon the politics, but that is what is driving the market at the moment. I would have to think that the president has something else up his sleeve because this seems like this could be a political problem for him. We know there is a very small percentage of undecided voters out there, and many of them have 401K's so, right or wrong, having the market tank right before the elections won't garner any favors from them.
Here's where we are:
Another headline yesterday on CNBC, "House Democrats say Facebook, Amazon, Alphabet, Apple enjoy ‘monopoly power’ and recommend big changes" didn't help the big tech stocks, adding to the sell-off, after the House Judiciary subcommittee on antitrust released its findings and recommendations.
Internally the numbers were negative, completely reversing the positive early numbers.
The selling action obviously included a lot of emotional knee-jerk selling, so I guess in the coming days when investors have time to think about this, we'll find out just how much the market had already priced in a deal. As I said, I wasn't optimistic, and I assumed the market was rallying because it was. I guess we'll find out because here's another dip for the dip buyers if they want it.
The S&P 500 (C-fund) was putting some finishing touches on a bullish looking inverted ahead and shoulders pattern, and looked primed for a breakout above the neckline before the news of the negotiations breakdown yesterday. Isn't it interesting how news seems to come out at pivotal points on the chart?
A close up shows that the S&P did find some support at the 20-day EMA, although that just could be a one day holding point, as is sometimes the case. But this chart also shows the filling of one of those "stealth gaps" (red box) which was the area between Friday's closing price and Monday's low. So, it wasn't the worst place for the S&P 500 to pull back to, but the bears have another day to try to push it lower, and potentially fill the open gap by 3307 (blue.)
The DWCPF (S-fund) made a new all-time high yesterday and was was on its way to a new record closing high before the reversal. Those pesky open gaps, which didn't look like much of a concern in the early trading yesterday, are now back in the picture - at least the one from Monday near 1580, anyway.
The EFA (I-fund) had just filled its overhead gap and the lower gap on consecutive days (blue). Yesterday it decided to fill in yet another open gap (red). Three gaps filled in three directions (down, up, down) in three consecutive days. I'm not sure I remember ever seeing that before.
Several times yesterday I posted in the forum these great technical developments that we were seeing in the charts. The move above some of the sticky resistance on the Dow Transportation Index was on its way to being broken... before the reversal.
BND (F-fund) may have put in a turning point. That spinning top pattern tends to come at indecision areas and often precedes a reversal. That's what the chart says, if you think yesterday's reversal was serious and not a temporary emotional move.
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
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.
