The market gave us a mild reminder yesterday that stocks don't go up every day, but the losses were quite benign in the big three indices, particularly given the strength recently, although small caps did take a bigger hit. The Dow lost 63-points on Turnaround Tuesday, and after the major rally leading into this week, a little pre-holiday reversal may be unfolding. Bonds and the F-fund were up, while the I-fund pulled back.
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Today is historically quite positive but we don't typically rally for three weeks leading into the holiday shortened Thanksgiving week. As for Friday, the half day of trading on the day after Thanksgiving, it has a decent historical record although it has actually been down 4 of the last 5 years with the S&P 500 losing 2.27% on that day in 2021, so there's no guarantees.
The initial reaction to Nvidia's earnings after hours on Tuesday is slightly negative despite a big beat on the top and bottom line numbers (earnings and revenue), plus better then expected guidance. I guess that's what happens when something is trading at all time highs and apparently priced for perfection. This could change by today's opening bell.
The 10-Year Treasury Yield and the dollar were fairly flat yesterday, so they weren't much of a factor.
The market leading Dow Transportation Index has been holding up well lately, pushing above both its 50 and 200-day averages recently, but the sideways to slightly upward sloping action is actually more of a bearish formation, as apposed to downward sloping bull flags. It's an "Oscarism" (Oscar Carboni) called an "F" flag and they are a positive short term formations while they build the flag, but they tend to eventually break to the downside when they do break, and it's usually a pretty big move.
The Russell 2000 has also been perking up in recent weeks after a disastrous late summer / early fall, but right now it is struggling just under its 200-day moving average - something that can be a roadblock to rallies in a bear market. It doesn't currently feel like a bear market but for small caps, the bear may actually still be here when looking at the longer-term chart.
The Asian markets are a big part of our I-fund. The Japanese Nikkei has been performing well, but it just hit its prior highs and failed to breakout. Perhaps this will be the start of a double top pullback? If so, there's a lot of room on the downside to support, with several open gaps along the way.
And Hong Kong's market has been a different story as it never really got any momentum after the strong start in January of this year.
European markets have performed better, but the I-fund may have a headwind to deal with if the Asian markets don't improve from this negative technical picture - at least in the short-term in the case of the Nikkei.
The stock market and the TSP will be closed tomorrow, but back open on Friday. The stock market will close early on Friday (1 PM ET) but that won't impact the 12 noon ET TSP transaction deadline.
The S&P 500 (C-fund) remains in a tight ascending trading channel but it is now dealing with the top of an old open gap, plus it is now stretched 250-points above its 200-day EMA. It's had a great run, the charts have improved nicely, and seasonality is on its side, but those open gaps below and the overbought conditions leave it vulnerable to a pullback to some degree.
DWCPF (S-fund) fell yesterday, giving up Monday's gains. The question regarding a pullback will be whether last week's successful test of the 200-day EMA will suffice, or it it has those open gaps on its mind.
EFA (I-fund) pulled back as well yesterday, nearly giving back all of Monday's gains, but it is still basically pinned to the top of the blue trading channel, which is a sign of strength, but it also leaves the I-fund vulnerable to a possible test of the bottom of the channel, if not the moving averages and the second open gap below near 69.50.
BND (bonds / F-fund) looks similar to the I-fund chart as it crawls up the top of its resistance line. It broke above the 200-day EMA (exponential average) this week, but now it will have to deal with the orange 200-day simple average. It's a very bullish looking chart, but too far, too fast may apply here, and we could see some backing and filling in the short-term.
Thanks so much for reading! Have a great Thanksgiving and we'll see you back here on Friday for a brief update.
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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Today is historically quite positive but we don't typically rally for three weeks leading into the holiday shortened Thanksgiving week. As for Friday, the half day of trading on the day after Thanksgiving, it has a decent historical record although it has actually been down 4 of the last 5 years with the S&P 500 losing 2.27% on that day in 2021, so there's no guarantees.
The initial reaction to Nvidia's earnings after hours on Tuesday is slightly negative despite a big beat on the top and bottom line numbers (earnings and revenue), plus better then expected guidance. I guess that's what happens when something is trading at all time highs and apparently priced for perfection. This could change by today's opening bell.
The 10-Year Treasury Yield and the dollar were fairly flat yesterday, so they weren't much of a factor.
The market leading Dow Transportation Index has been holding up well lately, pushing above both its 50 and 200-day averages recently, but the sideways to slightly upward sloping action is actually more of a bearish formation, as apposed to downward sloping bull flags. It's an "Oscarism" (Oscar Carboni) called an "F" flag and they are a positive short term formations while they build the flag, but they tend to eventually break to the downside when they do break, and it's usually a pretty big move.
The Russell 2000 has also been perking up in recent weeks after a disastrous late summer / early fall, but right now it is struggling just under its 200-day moving average - something that can be a roadblock to rallies in a bear market. It doesn't currently feel like a bear market but for small caps, the bear may actually still be here when looking at the longer-term chart.
The Asian markets are a big part of our I-fund. The Japanese Nikkei has been performing well, but it just hit its prior highs and failed to breakout. Perhaps this will be the start of a double top pullback? If so, there's a lot of room on the downside to support, with several open gaps along the way.
And Hong Kong's market has been a different story as it never really got any momentum after the strong start in January of this year.
European markets have performed better, but the I-fund may have a headwind to deal with if the Asian markets don't improve from this negative technical picture - at least in the short-term in the case of the Nikkei.
The stock market and the TSP will be closed tomorrow, but back open on Friday. The stock market will close early on Friday (1 PM ET) but that won't impact the 12 noon ET TSP transaction deadline.
The S&P 500 (C-fund) remains in a tight ascending trading channel but it is now dealing with the top of an old open gap, plus it is now stretched 250-points above its 200-day EMA. It's had a great run, the charts have improved nicely, and seasonality is on its side, but those open gaps below and the overbought conditions leave it vulnerable to a pullback to some degree.
DWCPF (S-fund) fell yesterday, giving up Monday's gains. The question regarding a pullback will be whether last week's successful test of the 200-day EMA will suffice, or it it has those open gaps on its mind.
EFA (I-fund) pulled back as well yesterday, nearly giving back all of Monday's gains, but it is still basically pinned to the top of the blue trading channel, which is a sign of strength, but it also leaves the I-fund vulnerable to a possible test of the bottom of the channel, if not the moving averages and the second open gap below near 69.50.
BND (bonds / F-fund) looks similar to the I-fund chart as it crawls up the top of its resistance line. It broke above the 200-day EMA (exponential average) this week, but now it will have to deal with the orange 200-day simple average. It's a very bullish looking chart, but too far, too fast may apply here, and we could see some backing and filling in the short-term.
Thanks so much for reading! Have a great Thanksgiving and we'll see you back here on Friday for a brief update.
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.
