Stocks pulled back on Wednesday as they digest the recent gains. I don't think the action told us much because some consolidation after a week long rally is normal, but it could also give bears the opening they've been waiting for to sell a bear market rally - it's tough to say after one down day. The Dow lost 449-points while small caps lagged. Bonds rallied after a sharp 2-day decline. Oil rallied higher.
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Internally the NYSE breadth was mixed with 1200 issues advancing and 2100 declining, but the trading volume as a lot more even with 2.1 billion shares up compared to 2.5 billion down. The Nasdaq saw similar ratios.
The yield on the 10-year Treasury pulled back after hitting a fresh intraday high in the morning. That decline helped the F-fund have a nice day for once, but you can see that the very narrow rising trading channel is still intact. Longer-term there is some resistance near 2.4% so perhaps we're due for a pullback in yields, which would help the F-fund.
There's not a lot on the economic data front until next Friday (April 1) when we get the March jobs report, so between now and then I would look to the price of oil, as well as any geopolitical headlines, as the stock market catalyst. As far as the charts go, as you will see, some of the overhead resistance that we were watching held, and that will be the test going forward.
The S&P 500 (C-fund) pulled back after running into some stiff resistance. That orange moving average has been holding firm, and that red line is the top of a parallel channel off the lows with only the emotional day of the Russian invasion breaking below that support line. We'll be watching to see if that purple 50-day EMA can hold on any further pullback, and if not, it's a long way down to the bottom of that red channel. Most of the recent peaks saw some chopping back an forth before the next leg down began, so we'll see if the bulls can put together a come back rally today that starts a new chop.
The DWCPF (small caps / S-fund) was down sharply yesterday giving up all of Tuesday's gains and it did close back below its 50-day average as it dances above and below that average for the last several days. Again, it's at the top of a channel and it needs to break out or else a test of the bottom of the channel could be in the cards.
The EFA (I-fund) has the same story. It is now on the south side of the 50-day EMA and it could be pointing right toward that open gap near 70. This is how bear markets operate so the bulls need to act fast to avoid what looks like the inevitable.
BND (Bonds / F-fund) bounced back after the sharp two day sell off. It remains in that trading channel, which is heading down fast. The 10-year T-note yield is at the top of a large ascending trading channel so it's possible that it could pull back, which could give bonds and the F-fund some relief.
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 stock market struggled in early March when the price of oil moved up over $110 a barrel. Well, don't look now but it was back at $115 a barrel yesterday so it wasn't too surprising to see some selling in stocks. The closing high price was just under $125 on March 8th and it looks like it wants to test that level again.
Internally the NYSE breadth was mixed with 1200 issues advancing and 2100 declining, but the trading volume as a lot more even with 2.1 billion shares up compared to 2.5 billion down. The Nasdaq saw similar ratios.
The yield on the 10-year Treasury pulled back after hitting a fresh intraday high in the morning. That decline helped the F-fund have a nice day for once, but you can see that the very narrow rising trading channel is still intact. Longer-term there is some resistance near 2.4% so perhaps we're due for a pullback in yields, which would help the F-fund.
There's not a lot on the economic data front until next Friday (April 1) when we get the March jobs report, so between now and then I would look to the price of oil, as well as any geopolitical headlines, as the stock market catalyst. As far as the charts go, as you will see, some of the overhead resistance that we were watching held, and that will be the test going forward.
The S&P 500 (C-fund) pulled back after running into some stiff resistance. That orange moving average has been holding firm, and that red line is the top of a parallel channel off the lows with only the emotional day of the Russian invasion breaking below that support line. We'll be watching to see if that purple 50-day EMA can hold on any further pullback, and if not, it's a long way down to the bottom of that red channel. Most of the recent peaks saw some chopping back an forth before the next leg down began, so we'll see if the bulls can put together a come back rally today that starts a new chop.
The DWCPF (small caps / S-fund) was down sharply yesterday giving up all of Tuesday's gains and it did close back below its 50-day average as it dances above and below that average for the last several days. Again, it's at the top of a channel and it needs to break out or else a test of the bottom of the channel could be in the cards.
The EFA (I-fund) has the same story. It is now on the south side of the 50-day EMA and it could be pointing right toward that open gap near 70. This is how bear markets operate so the bulls need to act fast to avoid what looks like the inevitable.
BND (Bonds / F-fund) bounced back after the sharp two day sell off. It remains in that trading channel, which is heading down fast. The 10-year T-note yield is at the top of a large ascending trading channel so it's possible that it could pull back, which could give bonds and the F-fund some relief.
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.
