After a big rally failure on Tuesday, stocks tried again on Wednesday and this time succeeded in holding the gains into the close. But be careful. T'is the time for holiday reversals. We'll talk about that below. The Dow gained 344-points while the small caps, the Nasdaq, and Transportation stocks led on the upside with 2% gains on the day.
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What about the Yield on the 10-year Treasury which has been going up all month? Is the recent dip part of a pre-holiday reversal?
It was a risk on kind of day with commodities up, including the price of oil which is back above its key 50-day EMA. But - broken record here - is this part of the pre-holiday reversal phenomenon?
What about Bitcoin? It too had been in an awful downtrend, and here it is reversing back up just in time for a pre-holiday reversal.
Just when we were expecting some kind of relief rally, we get one, but it may be marred by the possibility that we are seeing a typical market reversal just before a 3-day holiday weekend. So we may be heading into the holiday weekend with more questions than answers. It's not that stocks have to go down after the holiday, and they may not. But it is a trend that is not uncommon. By the end of this commentary you will be sick of hearing this.
Again, the TSP will not be processing transactions / IFTs on Friday.
The S&P 500 (C-fund) rallied back after Tuesday's failed rally, and this time it was able to close back above its 200-day average. It is still below the 50-day EMA, where it has been for three straight days, which is a technical concern. Even if this rally is a pre-holiday reversal, can it push through this tough area of old support turned resistance today?
DWCPF (S-fund / small caps) had a big day and it has been showing signs of wanting to outperform the large caps recently. There's an open gap and the 50-day EMA up in the 1965 area, and of course we have to consider that this area could potentially be a resistance area for any continued pre-holiday rally.
The EFA (I-fund) was up about 1% but it also may have broken it descending trading channel with those gains. Or was it just a .... I won't say it.
BND (Bonds / F-fund) was up but it closed near the lows of the day so it wasn't overly impressive. I recently mentioned that we could be at some very long term support for bonds which could ignite some kind of a relief rally, but we know the Fed is raising interest rates so bonds are still risky.
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 for reading. With the TSP being closed on Friday, I won't be posting a commentary, so have a great weekend!
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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The market survived the highly anticipated CPI and PPI reports with a failed rally on Tuesday after the CPI report ending with a modest loss, followed by Wednesday's big rally after the PPI report came in.
Both of these reports were on the "hot" side meaning inflation met or exceeded the high expectations, but perhaps the market had priced in something worse because we heard a lot of talk about inflation being close to peaking this week, although it is all speculation.
What I am most concerned about with the recent rally is the "Oscarism" (from Oscar Carboni) where he suggests that markets tend to reverse their trends before a major holiday weekend. We were certainly trending lower on many charts but yesterday we saw those trends reverse course just two days before the three day weekend for the stock market. I know the federal government isn't closed on Friday but the stock market is, as is the TSP. From tsp.gov...
Holiday Closing -
"Some financial markets will be closed on Friday, April 15 in observance of Good Friday. Consequently, the Thrift Savings Plan will not be updating share prices in any of the TSP funds for that day. Transactions that would have been processed Friday night (April 15) will be processed Monday night (April 18), at Monday's closing share prices."
By the way, because of this I will NOT be posting a commentary or TSP Talk Plus Report on Friday.
And the other part of the pre-holiday reversal phenomenon is that the trend that gets reversed before the holiday, tends to resume after the holiday weekend. So, can we trust this rally?
The dollar was down yesterday, reversing the recent strong upside trend.
The Transportation Index was a leader on the upside again again yesterday but after lingering near the lows for several days, was yesterday's rally just a pre-holiday reversal destined to roll back over next week?Both of these reports were on the "hot" side meaning inflation met or exceeded the high expectations, but perhaps the market had priced in something worse because we heard a lot of talk about inflation being close to peaking this week, although it is all speculation.
What I am most concerned about with the recent rally is the "Oscarism" (from Oscar Carboni) where he suggests that markets tend to reverse their trends before a major holiday weekend. We were certainly trending lower on many charts but yesterday we saw those trends reverse course just two days before the three day weekend for the stock market. I know the federal government isn't closed on Friday but the stock market is, as is the TSP. From tsp.gov...
Holiday Closing -
"Some financial markets will be closed on Friday, April 15 in observance of Good Friday. Consequently, the Thrift Savings Plan will not be updating share prices in any of the TSP funds for that day. Transactions that would have been processed Friday night (April 15) will be processed Monday night (April 18), at Monday's closing share prices."
By the way, because of this I will NOT be posting a commentary or TSP Talk Plus Report on Friday.
And the other part of the pre-holiday reversal phenomenon is that the trend that gets reversed before the holiday, tends to resume after the holiday weekend. So, can we trust this rally?
The dollar was down yesterday, reversing the recent strong upside trend.
What about the Yield on the 10-year Treasury which has been going up all month? Is the recent dip part of a pre-holiday reversal?
It was a risk on kind of day with commodities up, including the price of oil which is back above its key 50-day EMA. But - broken record here - is this part of the pre-holiday reversal phenomenon?
What about Bitcoin? It too had been in an awful downtrend, and here it is reversing back up just in time for a pre-holiday reversal.
Just when we were expecting some kind of relief rally, we get one, but it may be marred by the possibility that we are seeing a typical market reversal just before a 3-day holiday weekend. So we may be heading into the holiday weekend with more questions than answers. It's not that stocks have to go down after the holiday, and they may not. But it is a trend that is not uncommon. By the end of this commentary you will be sick of hearing this.
Again, the TSP will not be processing transactions / IFTs on Friday.
The S&P 500 (C-fund) rallied back after Tuesday's failed rally, and this time it was able to close back above its 200-day average. It is still below the 50-day EMA, where it has been for three straight days, which is a technical concern. Even if this rally is a pre-holiday reversal, can it push through this tough area of old support turned resistance today?
DWCPF (S-fund / small caps) had a big day and it has been showing signs of wanting to outperform the large caps recently. There's an open gap and the 50-day EMA up in the 1965 area, and of course we have to consider that this area could potentially be a resistance area for any continued pre-holiday rally.
The EFA (I-fund) was up about 1% but it also may have broken it descending trading channel with those gains. Or was it just a .... I won't say it.
BND (Bonds / F-fund) was up but it closed near the lows of the day so it wasn't overly impressive. I recently mentioned that we could be at some very long term support for bonds which could ignite some kind of a relief rally, but we know the Fed is raising interest rates so bonds are still risky.
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 for reading. With the TSP being closed on Friday, I won't be posting a commentary, so have a great weekend!
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.
