The Fed rarely fails to give the market what it wants, but investors have come to understand this and so this year we have seen rallies heading into the FOMC meetings. This time we had a pullback in the days leading up to the meeting, but there was a buying frenzy yesterday before the Fed's policy statement was delivered. Once the policy was announced we got the usual volatility, but the indices closed right about where they were before the announcement. Yes, it was a bullish move, but technically the charts are running into resistance.[TABLE="align: center"]
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We saw gains almost across the board with big gains in the small caps again, but the Transports were the exception as earnings out of FedEx helped keep that index in negative territory for the day.
The S&P 500 (C-fund) and DWCPF (S-fund) both had strong days but find themselves up against resistance after yesterday's rally filled some open gaps and tested the 50-day averages.
As for seasonality, this week was supposed to be bad, and it started that way, so yesterday's rally was a bit of a surprise, but it (the 22nd) is actually the best day of the week historically, even though it is only up about 50% of the time. Today and tomorrow (23rd and 24th) are down more often than up. It's not until next week that things perk back up into the green.
Chart provided courtesy of www.sentimentrader.com
Internally the numbers were very positive yesterday as you might expect. The NYSE was almost 4 to 1 in favor of advancing issues, and the Nasdaq was more than 2 to 1 positive. Volume ratios were similar.
The dollar had a wild ride which caused stocks to trade in a very wide range during the day. The early losses in the dollar turned around to end with a decent gain and that pushed the Dow, up 520-point at the highs, off those highs to close with a 338-point gain.
The yield on the 10-year Treasury was up modestly, and they closed at their highs. The Fed is still considering interest rate hikes, but nothing in the near future, and the announcement of impending tapering of the bond buying program - although no date - did have investors believing that yields may have already hit their lows. However, the chart isn't really indicating that a low is in yet.
The FOMC meeting is behind us, earnings season is still weeks away, so we may start seeing more focus on the budget, debt ceiling, and potential government shutdown. The folks in Washington eventually come through with a last minute deal, but sometimes the sausage making is tough to watch, and the market will be watching.
The S&P 500 (C-fund) was up strongly before the Fed meeting, and some buying before the policy announcement isn't too unexpected, but the magnitude of the rally may have been. We do expect a lot of volatility after the policy statement and that did happen, but the S&P basically closed right where it was before the announcement. In the interim between the Fed and the close we saw the S&P 500 hit a high of 4417, just a few points below the 50-day EMA and the top of the open gap. We saw how firm the support was from the 50-day EMA during the rally in recent months. Now we'll see how strong it is as resistance.
The DWCPF (S-fund) had a big day and after the FOMC meeting it moved meaningfully above the 50-day EMA, but it settled down and closed below it again, and also filled the open gap in the process so this is in the same situation as the S&P. In hindsight, the rising support line did a great job in holding again.
The EFA (EAFE Index / I-fund) had a good day but as you can see there is a lot of resistance on the chart and the EFA settled the day below all of it. The next open gap to consider is down by 79.25.
The BND (bonds / F-fund) was up despite the gain in the 10-year Treasury Yield. It remains in the steadily rising channel.
The Dow Transportation Index was down on the day, mostly because of a major sell off in FedEx yesterday. The close was below July's low and it sits right on 14,000. This needs some help, and may be due for some relief after falling for almost three straight weeks. It is generally considered the market leader, so that's troubling.
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. 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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We saw gains almost across the board with big gains in the small caps again, but the Transports were the exception as earnings out of FedEx helped keep that index in negative territory for the day.
The S&P 500 (C-fund) and DWCPF (S-fund) both had strong days but find themselves up against resistance after yesterday's rally filled some open gaps and tested the 50-day averages.
As for seasonality, this week was supposed to be bad, and it started that way, so yesterday's rally was a bit of a surprise, but it (the 22nd) is actually the best day of the week historically, even though it is only up about 50% of the time. Today and tomorrow (23rd and 24th) are down more often than up. It's not until next week that things perk back up into the green.
Chart provided courtesy of www.sentimentrader.com
Internally the numbers were very positive yesterday as you might expect. The NYSE was almost 4 to 1 in favor of advancing issues, and the Nasdaq was more than 2 to 1 positive. Volume ratios were similar.
The dollar had a wild ride which caused stocks to trade in a very wide range during the day. The early losses in the dollar turned around to end with a decent gain and that pushed the Dow, up 520-point at the highs, off those highs to close with a 338-point gain.
The yield on the 10-year Treasury was up modestly, and they closed at their highs. The Fed is still considering interest rate hikes, but nothing in the near future, and the announcement of impending tapering of the bond buying program - although no date - did have investors believing that yields may have already hit their lows. However, the chart isn't really indicating that a low is in yet.
The FOMC meeting is behind us, earnings season is still weeks away, so we may start seeing more focus on the budget, debt ceiling, and potential government shutdown. The folks in Washington eventually come through with a last minute deal, but sometimes the sausage making is tough to watch, and the market will be watching.
The S&P 500 (C-fund) was up strongly before the Fed meeting, and some buying before the policy announcement isn't too unexpected, but the magnitude of the rally may have been. We do expect a lot of volatility after the policy statement and that did happen, but the S&P basically closed right where it was before the announcement. In the interim between the Fed and the close we saw the S&P 500 hit a high of 4417, just a few points below the 50-day EMA and the top of the open gap. We saw how firm the support was from the 50-day EMA during the rally in recent months. Now we'll see how strong it is as resistance.
The DWCPF (S-fund) had a big day and after the FOMC meeting it moved meaningfully above the 50-day EMA, but it settled down and closed below it again, and also filled the open gap in the process so this is in the same situation as the S&P. In hindsight, the rising support line did a great job in holding again.
The EFA (EAFE Index / I-fund) had a good day but as you can see there is a lot of resistance on the chart and the EFA settled the day below all of it. The next open gap to consider is down by 79.25.
The BND (bonds / F-fund) was up despite the gain in the 10-year Treasury Yield. It remains in the steadily rising channel.
The Dow Transportation Index was down on the day, mostly because of a major sell off in FedEx yesterday. The close was below July's low and it sits right on 14,000. This needs some help, and may be due for some relief after falling for almost three straight weeks. It is generally considered the market leader, so that's troubling.
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. 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.
