You wouldn't know it by just seeing the returns yesterday, but most indices closes well off their lows and almost posted positive reversal days. That could just be instinctive knee-jerk action from the dip buyers and FOMO traders, but they let the bears know that they are still around and may not make it easy for them to push stocks lower during a typical weak post options quad witching expiration week. Still, the Dow lost a hefty 245-points and that's two down days in a row as the indices have become quite stretched to the upside. Yields were down helping bonds and the F-fund to a modest again.
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I'll reiterate my sentiment from yesterday's commentary that the indices have become extended on the upside and we don't have to look much further than the index that has helped the market to a very strong start to 2023 - the Nasdaq 100, where the largest tech stocks are grouped together. We have a technical double top here as it tests the March of 2022 highs, and it has nearly recovered that 9 month loss in just 6 months. There's plenty of resistance in the area giving it a good excuse to perhaps take a little breather before trying to move higher.
The Yield on the 10-year Treasury has been coiling again, and that tends to precede a bigger move, in yields, bond prices (F-fund) and most likely, stocks. But watch out for a fake out move, which seems to be required this year to get us all leaning the wrong way in bonds.
Bond prices and the F-fund will normally move counter to the 10-year yield so again, watch for a fake out move in one direction out of the consolidation, that could be a sign that we are about to see a big move in the other direction. Although I'm not sure if that small failed breakdown last week has already done what I am talking about.
This chart shows how much more bullish investors have gotten over the last few months as it now shows 2 bulls for every bear. At about this point near the end of the 1st quarter those numbers were reversed with 2 bears for every bull. The shift in sentiment from very bearish to very bullish is what triggers rallies, but now we're seeing some extremes. Much lower bull to bear ratios have come near short-term market peaks, but granted, most of those were during the thick of last year's bear market.
Again, it's a slow week for economic data so the market will be on the lookout for other catalysts. Disappointing earnings from FedEx after the bell yesterday could set a negative tone to start the day, although they will likely impact the Transportation Index more than the broader market.
The S&P 500 (C-fund) put in its first 2-day losing streak in about a month, and why not? Stocks have gone almost straight up in June and, after breaking through some resistance last, it attempted pull back and retest it as support. So far, so good but if it breaks down below that old resistance line, a move to fill that open gap could be in the cards. Getting back in that blue trading channel wouldn't be a bad situation as the angle of incline was getting a little out of hand.
The DWCPF (S-fund) took a bigger loss than small caps, and the 1.3% loss in the regional banks and decline in the price of oil and oil services stocks yesterday had this fund underperforming. The question is how deep could a pullback here go -- the bottom of the channel, fill the gap, etc.?
The EFA (I-fund ETF) was the biggest loser yesterday as the international markets were closed when the US was making an afternoon comeback, and the dollar, which was up big in the morning, pulled back later. The I-fund price had not been posted when I was writing this, but it wouldn't surprise me if the TSP made the loss is less than this 1.32% that we see here, but you never know.
BND (Bonds / F-fund) tried again to push above the 50 and 200-day EMAs yesterday, but failed to hold into the close. Technically, that's not encouraging but look for some end of the month rebalancing from stocks into bonds by money managers to potentially push bonds up before the quarter ends.
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
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I'll reiterate my sentiment from yesterday's commentary that the indices have become extended on the upside and we don't have to look much further than the index that has helped the market to a very strong start to 2023 - the Nasdaq 100, where the largest tech stocks are grouped together. We have a technical double top here as it tests the March of 2022 highs, and it has nearly recovered that 9 month loss in just 6 months. There's plenty of resistance in the area giving it a good excuse to perhaps take a little breather before trying to move higher.
The Yield on the 10-year Treasury has been coiling again, and that tends to precede a bigger move, in yields, bond prices (F-fund) and most likely, stocks. But watch out for a fake out move, which seems to be required this year to get us all leaning the wrong way in bonds.
Bond prices and the F-fund will normally move counter to the 10-year yield so again, watch for a fake out move in one direction out of the consolidation, that could be a sign that we are about to see a big move in the other direction. Although I'm not sure if that small failed breakdown last week has already done what I am talking about.
This chart shows how much more bullish investors have gotten over the last few months as it now shows 2 bulls for every bear. At about this point near the end of the 1st quarter those numbers were reversed with 2 bears for every bull. The shift in sentiment from very bearish to very bullish is what triggers rallies, but now we're seeing some extremes. Much lower bull to bear ratios have come near short-term market peaks, but granted, most of those were during the thick of last year's bear market.
Again, it's a slow week for economic data so the market will be on the lookout for other catalysts. Disappointing earnings from FedEx after the bell yesterday could set a negative tone to start the day, although they will likely impact the Transportation Index more than the broader market.
The S&P 500 (C-fund) put in its first 2-day losing streak in about a month, and why not? Stocks have gone almost straight up in June and, after breaking through some resistance last, it attempted pull back and retest it as support. So far, so good but if it breaks down below that old resistance line, a move to fill that open gap could be in the cards. Getting back in that blue trading channel wouldn't be a bad situation as the angle of incline was getting a little out of hand.
The DWCPF (S-fund) took a bigger loss than small caps, and the 1.3% loss in the regional banks and decline in the price of oil and oil services stocks yesterday had this fund underperforming. The question is how deep could a pullback here go -- the bottom of the channel, fill the gap, etc.?
The EFA (I-fund ETF) was the biggest loser yesterday as the international markets were closed when the US was making an afternoon comeback, and the dollar, which was up big in the morning, pulled back later. The I-fund price had not been posted when I was writing this, but it wouldn't surprise me if the TSP made the loss is less than this 1.32% that we see here, but you never know.
BND (Bonds / F-fund) tried again to push above the 50 and 200-day EMAs yesterday, but failed to hold into the close. Technically, that's not encouraging but look for some end of the month rebalancing from stocks into bonds by money managers to potentially push bonds up before the quarter ends.
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.
