The recent action on Wall Street was turned on its head on Wednesday as what has been going up, came down, and what has been going down, went up. The price of oil was down more than 12% and that exhale gave the oversold stock market a reason to move higher, and investors have been waiting for a reason to buy some beaten down names. The Dow jumped 653-points, and that was the market laggard as the Nasdaq and small caps ran up over 3%, while the S&P 500 had to settle for a 2.6% gain. The I-fund was on another level as a big decline in the dollar helped it to a gain over 4%. Bonds were down as yields moved up.
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The S&P 500 (C-fund) had a big day but the 2.6% gain looks like a minor blip on the chart as it is surrounded by a lot of volatile days. It's clearly in a downtrend and perhaps this rally can't be trusted, but as I mentioned up top, some bear market rallies can last a lot longer than we'd expect. 4310, 4350 and 4400 look to be the upside resistance areas.
The DWCPF (small caps / S-fund) had a great day but again, it is just a relief rally in a down trending market so far. It could get better, but nothing here says the worst is over yet, so enjoy any gains you can get here because they may not last. Once the technical picture improves, that attitude can change.
The EFA (I-fund) gained over 4% on the day with the help of a plunge in the dollar. I think that, and the chart, says it all.
BND (Bonds / F-fund) made a new closing low despite that the 10-year yield is below its 2022 highs. As I mentioned yesterday, it is now looking over a precipice.
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
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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 don't get days like yesterday very often, and almost every time we do see gains of 2 or 3% or more, it's following a major decline. The question is whether we will see some follow through, or can we trust it at all?
We're certainly not at 2008 bear market kind of damage yet but here's a reminder that the year and a half bear market back then produced some monster rallies, and some lasted weeks if not months, but the longer term trend was down. It's not easy to catch a rally in this kind of market because you do have to gamble with the tide moving against you, but it cam be rewarding. You do have to be nimble because you you don't know exactly when the rallies will fail, or if they will. But some of the best trading opportunities come in bear markets, which arguably, we may be in right now.
The price of oil dropping 12% was the catalyst for the rally but not a lot of damage was done to this chart despite the loss. It didn't even touch its 20-day EMA. So what happens if the price bounces off of that 20-day average? Do stocks roll right back over? Obviously there's a lot more to the story than the moving average, so the market will remain headline driven as the world deals with the Russian oil situation.
Is this a good time to remind you of the CNBC special programming curse? As we talked about yesterday, they had a special called "Oil Shock" on Tuesday night talking about the crisis in the market, and the next day the price of oil falls 12%.
The dollar also reversed course yesterday as it fell about 1% on the day, a big move for the green back. It filled that large blue gap that was opened last week, and opened a new gap near 26.40. This 1% move was a big reason why the I-fund beat the U.S. stock funds by 1% or more yesterday.
The Yield on the 10-year Treasury shot back up and it looks like a move toward the previous high is in progress.
We get the CPI report today, but inflation has been put on the back burner while the world is detracted by the the shiny objects in Eastern Europe. The dangers of inflation are obviously not over. The question is whether it is running closer to the 7 or 8% that we see in some reports, or at 10% - 14% as we see in the price of many goods. A tame CPI report may be able to keep this relief rally going, but I suppose a "hot" CPI report could flip the market right back over as the Fed's FOMC meeting gets closer.
We're certainly not at 2008 bear market kind of damage yet but here's a reminder that the year and a half bear market back then produced some monster rallies, and some lasted weeks if not months, but the longer term trend was down. It's not easy to catch a rally in this kind of market because you do have to gamble with the tide moving against you, but it cam be rewarding. You do have to be nimble because you you don't know exactly when the rallies will fail, or if they will. But some of the best trading opportunities come in bear markets, which arguably, we may be in right now.
The price of oil dropping 12% was the catalyst for the rally but not a lot of damage was done to this chart despite the loss. It didn't even touch its 20-day EMA. So what happens if the price bounces off of that 20-day average? Do stocks roll right back over? Obviously there's a lot more to the story than the moving average, so the market will remain headline driven as the world deals with the Russian oil situation.
Is this a good time to remind you of the CNBC special programming curse? As we talked about yesterday, they had a special called "Oil Shock" on Tuesday night talking about the crisis in the market, and the next day the price of oil falls 12%.
The dollar also reversed course yesterday as it fell about 1% on the day, a big move for the green back. It filled that large blue gap that was opened last week, and opened a new gap near 26.40. This 1% move was a big reason why the I-fund beat the U.S. stock funds by 1% or more yesterday.
The Yield on the 10-year Treasury shot back up and it looks like a move toward the previous high is in progress.
We get the CPI report today, but inflation has been put on the back burner while the world is detracted by the the shiny objects in Eastern Europe. The dangers of inflation are obviously not over. The question is whether it is running closer to the 7 or 8% that we see in some reports, or at 10% - 14% as we see in the price of many goods. A tame CPI report may be able to keep this relief rally going, but I suppose a "hot" CPI report could flip the market right back over as the Fed's FOMC meeting gets closer.
The S&P 500 (C-fund) had a big day but the 2.6% gain looks like a minor blip on the chart as it is surrounded by a lot of volatile days. It's clearly in a downtrend and perhaps this rally can't be trusted, but as I mentioned up top, some bear market rallies can last a lot longer than we'd expect. 4310, 4350 and 4400 look to be the upside resistance areas.
The DWCPF (small caps / S-fund) had a great day but again, it is just a relief rally in a down trending market so far. It could get better, but nothing here says the worst is over yet, so enjoy any gains you can get here because they may not last. Once the technical picture improves, that attitude can change.
The EFA (I-fund) gained over 4% on the day with the help of a plunge in the dollar. I think that, and the chart, says it all.
BND (Bonds / F-fund) made a new closing low despite that the 10-year yield is below its 2022 highs. As I mentioned yesterday, it is now looking over a precipice.
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.
