The stock market took a much needed rest last week - a week with some historical bearishness, but now comes the end of June and into July where seasonality is no longer an issue. The Dow fell 219-points on Friday and the losses were broad across most indices and sectors. With the dollar rallying on Friday, and regional bank stocks falling sharply, the I-fund and S-funds lagged on the day, and for the week. Yields were down giving the F-fund a solid gain on the day.
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Seasonality is rarely a primary indicator, but last week was one of the weaker weeks of the year being a week following the June quadruple witching expiration week. However, that is now in the rear-view mirror and the seasonal trend gets better to end the month, and the first half of July also has a better than average record.
Chart provided courtesy of www.sentimentrader.com
Again, not a primary indicator, but with the market taking a break during a typically weak period, seasonality seems to be working to some extent, and the market does have a decent record surrounding the 4th of July holiday.
This chart shows what the C, S, and I funds have been doing over the last few months, and while June has been a good month for all three TSP stock funds, this year has been more of an anomaly than typical with the funds having very different outcomes so fund selection is very important so far this year. This isn't exactly a market where you can throw darts at the stock quotes and pick a winner. That's obviously a throw back analogy for those who used to get their stock market information from newspapers.
The dollar was up sharply on Friday putting pressure on stocks and prices in general, and of course the I-fund tends to be most negatively impacted. The Federal Reserve decreased their balance sheet by another $25 billion last week contributing to the dollar's strength. So, if the dollar made a new short-term low, the stock market, particularly the I-fund, could be in for a rough ride in the coming weeks. However, the 50-day EMA is being tested and could hold as resistance, which could be a breeze at the backs on the stock market, so keep an eye on this.
The yield on the 10-year Treasury has been consolidating in a range for the last few weeks and that probably means a breakout in one direction or the other is coming. I posted a longer term chart of this last week that showed that the trend has been for the yield to break in the opposite direction from the trend that came into the consolidation. If longer term yields do breakdown, the F-fund will likely benefit.
The price of oil and the Dow Transportation Index are two solid indications of economic strength, but they're actually telling different stories right now with oil flirting with the recent closing lows and the Transports breaking above resistance recently. Oil did post a positive reversal day on Friday after bounding off of support, although support could be the bottom of a big bear flag. Lower oil is good for consumers, but again, possibly a bad sign for the economy.
The Small caps and the regional banks both got slammed last week as those banks are a major component of the small cap indices. The Russell is testing its 200-day EMA and the previous peak / breakout point so we head into this week with an important test.
And that test may be almost solely reliant on what happens to those regional banks as the KRE ETF has just broken below a couple important support lines.
It's not a holiday week, but it may feel like one with the 4th of July holiday falling on a Tuesday, making for a possible 4-day weekend for some on Wall Street and around the country. That should make next Monday a very low volume trading day, which normally helps the bulls, unless there is some negative news released in which case the indices could be pushed around easily. And with the political and geopolitical turmoil heating up again, that's not a long shot.
The S&P 500 (C-fund) pulled back from the recent highs, and that's not too much of a surprise given last week's bearish seasonality record plus the fact that stocks had come long way without so much as blinking since the late May low. I am noting the rolling over of the PMO indicator, even though it may be premature to anticipate a negative crossover. But previous similar looks have led to pullbacks and /or side ways action for a month or more.
The DWCPF (S-fund) fell sharply last week losing about 3%, and there is more room on the downside if this plans to test the 200 and 50-day EMA and, if they don't hold, the bottom of the open gap near 1665. If the bulls can step up here for the small caps, and they may need some help from those regional banks, then perhaps the bullish action will resume without testing those lower support areas.
The EFA (I-fund) lagged on the week, gapping down hard on Friday with that 0.54% gain in the dollar. There's open gaps above and below and its' just a matter of which get filled first. Logic may tell us that it will all depend on the action of the dollar. Stronger support shows up in the 69.50 - 70.50 area.
BND (Bonds / F-fund) was up on Friday but it closed well off the opening highs, and it failed to hold again at the 200-day EMA. It's got a bear flag look to it, which is not good, but if it keeps knocking on those overhead moving averages, there's a good chance that it could break through.
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 so much 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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[TD="width: 338, align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
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Seasonality is rarely a primary indicator, but last week was one of the weaker weeks of the year being a week following the June quadruple witching expiration week. However, that is now in the rear-view mirror and the seasonal trend gets better to end the month, and the first half of July also has a better than average record.
Chart provided courtesy of www.sentimentrader.com
Again, not a primary indicator, but with the market taking a break during a typically weak period, seasonality seems to be working to some extent, and the market does have a decent record surrounding the 4th of July holiday.
This chart shows what the C, S, and I funds have been doing over the last few months, and while June has been a good month for all three TSP stock funds, this year has been more of an anomaly than typical with the funds having very different outcomes so fund selection is very important so far this year. This isn't exactly a market where you can throw darts at the stock quotes and pick a winner. That's obviously a throw back analogy for those who used to get their stock market information from newspapers.
The dollar was up sharply on Friday putting pressure on stocks and prices in general, and of course the I-fund tends to be most negatively impacted. The Federal Reserve decreased their balance sheet by another $25 billion last week contributing to the dollar's strength. So, if the dollar made a new short-term low, the stock market, particularly the I-fund, could be in for a rough ride in the coming weeks. However, the 50-day EMA is being tested and could hold as resistance, which could be a breeze at the backs on the stock market, so keep an eye on this.
The yield on the 10-year Treasury has been consolidating in a range for the last few weeks and that probably means a breakout in one direction or the other is coming. I posted a longer term chart of this last week that showed that the trend has been for the yield to break in the opposite direction from the trend that came into the consolidation. If longer term yields do breakdown, the F-fund will likely benefit.
The price of oil and the Dow Transportation Index are two solid indications of economic strength, but they're actually telling different stories right now with oil flirting with the recent closing lows and the Transports breaking above resistance recently. Oil did post a positive reversal day on Friday after bounding off of support, although support could be the bottom of a big bear flag. Lower oil is good for consumers, but again, possibly a bad sign for the economy.
The Small caps and the regional banks both got slammed last week as those banks are a major component of the small cap indices. The Russell is testing its 200-day EMA and the previous peak / breakout point so we head into this week with an important test.
And that test may be almost solely reliant on what happens to those regional banks as the KRE ETF has just broken below a couple important support lines.
It's not a holiday week, but it may feel like one with the 4th of July holiday falling on a Tuesday, making for a possible 4-day weekend for some on Wall Street and around the country. That should make next Monday a very low volume trading day, which normally helps the bulls, unless there is some negative news released in which case the indices could be pushed around easily. And with the political and geopolitical turmoil heating up again, that's not a long shot.
The S&P 500 (C-fund) pulled back from the recent highs, and that's not too much of a surprise given last week's bearish seasonality record plus the fact that stocks had come long way without so much as blinking since the late May low. I am noting the rolling over of the PMO indicator, even though it may be premature to anticipate a negative crossover. But previous similar looks have led to pullbacks and /or side ways action for a month or more.
The DWCPF (S-fund) fell sharply last week losing about 3%, and there is more room on the downside if this plans to test the 200 and 50-day EMA and, if they don't hold, the bottom of the open gap near 1665. If the bulls can step up here for the small caps, and they may need some help from those regional banks, then perhaps the bullish action will resume without testing those lower support areas.
The EFA (I-fund) lagged on the week, gapping down hard on Friday with that 0.54% gain in the dollar. There's open gaps above and below and its' just a matter of which get filled first. Logic may tell us that it will all depend on the action of the dollar. Stronger support shows up in the 69.50 - 70.50 area.
BND (Bonds / F-fund) was up on Friday but it closed well off the opening highs, and it failed to hold again at the 200-day EMA. It's got a bear flag look to it, which is not good, but if it keeps knocking on those overhead moving averages, there's a good chance that it could break through.
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 so much 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.
