Stocks were mixed yesterday with the Dow losing 71-points, the S&P 500 closing at the lows of the day with a minor loss of 0.11%, but we saw gains in the Nasdaq and small caps. Investors continue to try to make sense of what it heard last week from the Fed, and again earlier this week when they tried to walk back the rate hike talk some. Several indices are flirting with new highs but are there enough positive catalysts out there to see them breakout, especially with the Fed considering tightening?
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The dollar started out lower yesterday, then rallied into the close, and that's almost the opposite of what we saw in stocks, so whether the dollar is rolling over again here, or trying to remain in an uptrend can make a big difference in what the stocks market does going forward. It reversed higher yesterday without filling that open gap. If the gap was filled before it reversed up I would be more inclined to believe the upside has more to go, but so now we have to keep wondering if that gap will eventually get filled. There is a lot of shorting pressure on the dollar right now (bets against it), and that has more typically led to nice gains for the dollar going forward. That may be bad news for stocks and commodities going forward.
Internally the numbers were positive, particularly on the Nasdaq and in the share volume, and that's because the heavily traded big tech stocks led on the upside yesterday.
When we look at the S&P 500 Index (bottom) vs. the Equal Weighted S&P 500 Index (RSP, same 500 stocks weighted equally, on the top) we see that the larger stocks must still be doing the heavy lifting while most stocks are still struggling, relative to those big tech stocks.
All things considered, the market did a pretty good job recovering quickly from the Fed driven sell off last week. But as we see, the average stock may not be bouncing back as quickly. As the S&P 500 nears its all time high again, the question is whether what the Fed said and plans to do is something the market needs to be concerned about. After all, this has been a Fed driven market, particularly after COVID. If they do start taking away some of the market's fuel, we should eventually get a taper tantrum in the stock market, but so far there's just been a little talk.
The S&P 500 (C-fund) once again moved above 4250 intraday yesterday, but closed below it. This isn't exactly a double top set up, but clearly there is at least some amount of resistance in this area. The index closed at the lows of the day, which happen to coincide with the May highs, so once again we have the potential for a failed breakout if it closes below about 4240. It's currently pushing the top of that large blue trading channel.
The DWCPF (S-fund) also hit its overhead resistance and stalled, closing off those highs. Nothing too serious or surprising yet, but nothing to ignore. As I've said before, a breakout here has the potential for a big run up. But a failure up here again could also trigger another move down to the bottom of its channel, which is a long way down.
The EFA (I-fund) took a hit yesterday with the rally in the dollar putting some pressure on it. The 50-day EMA is in play as key support. If that UUP chart in the upper part of this report moves above 24.80 again, it has the potential to break this chart down below the 50-day EMA.
The Dow Transportation Index was down again, and unless it moves sideways and creates a little bull flag, the trend is now down and it is trading below the 50-day EMA so this market leader may be telling us that something is wrong.
The June seasonality chart suggests that this week was supposed to be rougher than it has been, but last week was bad for stocks and the chart suggested seasonality was on the bulls' side, so we did some flip flopping. Today is the 24th and for whatever reason it has one of the worst one-day records on all the charts.
Chart provided courtesy of www.sentimentrader.com
BND (bonds / F-fund) was off some as yields moved slightly higher. It's been a quiet few days for bonds and the chart has been holding up surprisingly well.
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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The dollar started out lower yesterday, then rallied into the close, and that's almost the opposite of what we saw in stocks, so whether the dollar is rolling over again here, or trying to remain in an uptrend can make a big difference in what the stocks market does going forward. It reversed higher yesterday without filling that open gap. If the gap was filled before it reversed up I would be more inclined to believe the upside has more to go, but so now we have to keep wondering if that gap will eventually get filled. There is a lot of shorting pressure on the dollar right now (bets against it), and that has more typically led to nice gains for the dollar going forward. That may be bad news for stocks and commodities going forward.
Internally the numbers were positive, particularly on the Nasdaq and in the share volume, and that's because the heavily traded big tech stocks led on the upside yesterday.
When we look at the S&P 500 Index (bottom) vs. the Equal Weighted S&P 500 Index (RSP, same 500 stocks weighted equally, on the top) we see that the larger stocks must still be doing the heavy lifting while most stocks are still struggling, relative to those big tech stocks.
All things considered, the market did a pretty good job recovering quickly from the Fed driven sell off last week. But as we see, the average stock may not be bouncing back as quickly. As the S&P 500 nears its all time high again, the question is whether what the Fed said and plans to do is something the market needs to be concerned about. After all, this has been a Fed driven market, particularly after COVID. If they do start taking away some of the market's fuel, we should eventually get a taper tantrum in the stock market, but so far there's just been a little talk.
The S&P 500 (C-fund) once again moved above 4250 intraday yesterday, but closed below it. This isn't exactly a double top set up, but clearly there is at least some amount of resistance in this area. The index closed at the lows of the day, which happen to coincide with the May highs, so once again we have the potential for a failed breakout if it closes below about 4240. It's currently pushing the top of that large blue trading channel.
The DWCPF (S-fund) also hit its overhead resistance and stalled, closing off those highs. Nothing too serious or surprising yet, but nothing to ignore. As I've said before, a breakout here has the potential for a big run up. But a failure up here again could also trigger another move down to the bottom of its channel, which is a long way down.
The EFA (I-fund) took a hit yesterday with the rally in the dollar putting some pressure on it. The 50-day EMA is in play as key support. If that UUP chart in the upper part of this report moves above 24.80 again, it has the potential to break this chart down below the 50-day EMA.
The Dow Transportation Index was down again, and unless it moves sideways and creates a little bull flag, the trend is now down and it is trading below the 50-day EMA so this market leader may be telling us that something is wrong.
The June seasonality chart suggests that this week was supposed to be rougher than it has been, but last week was bad for stocks and the chart suggested seasonality was on the bulls' side, so we did some flip flopping. Today is the 24th and for whatever reason it has one of the worst one-day records on all the charts.
Chart provided courtesy of www.sentimentrader.com
BND (bonds / F-fund) was off some as yields moved slightly higher. It's been a quiet few days for bonds and the chart has been holding up surprisingly well.
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.
