The media was falling all over itself about the S&P 500 flirting with 5000. I really wish it would have touched it so we could look past the celebratory hype. It's a big number and a sign that the large caps are acting quite well, but the rest of the market needs to catch up or it will all be for naught. The S and I-funds lagged and bonds (F) were down as yields held near support. The news flow is slow so it's all about 5000 right now.
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Favorable earnings after the bell from Disney and chip maker Arm will likely push the S&P 500 over 5000 mark today, so the media will be happy. The hype could also draw new money into the market and perhaps we will get an emotional "blow off" top, or at least a pop before any meaningful pullback. You never know, but if it does gap above 5000 this morning and hold, it would be more of an exception than a tendency since many 1000 handle milestones have been met with some churning below the number before a major breakout, although 4000 was one of those exceptions.
With 5K potentially behind us, we have to wonder if small caps and the I-fund have hit a wall, or is a big breakout brewing? The charts look very good as they consolidate in healthy formations after the giant rally at the end of 2023. I'm as nervous as anyone, as I explained yesterday regarding indicator warning signs, but it's tough to deny the bullish chart patterns we see forming on the S, I, and F-funds. They just have a little work to do to get above resistance.
The 10-year Treasury Yield was up slightly yesterday after finding support at the 200-day EMA again, and that put direct pressure on the F-fund.
The dollar was down and the pullback filled in a small open gap, but there are still open gaps all over this chart.
Following up on the recent strength in the market leading Dow Transportation Index, a breakout to a multi-month high was swatted back down yesterday with a negative reversal so perhaps a double top pullback is going to start now. It looks more like a cup and handle formation and they do tend to break to the upside so this may be a temporary pause.
As I said, earnings after the bell last night might set up a breakout above 5000 for the S&P 500, and that's all good, but if the rest of the market doesn't start coming along for the ride, the market rally in general could run out of steam. However, those charts look good so I'm optimistic, although still nervous and not married to any position.
The S&P 500 (C-fund) remains in the rising trading channel after tagging the top of it again yesterday. Disney's earnings may push this higher, maybe even above the channel, but it will be the close that counts. If we see a big rally early that fails late in the day, take it as a warning. It it can close above 5000, maybe there's more room to rally.
I posted smaller versions of the charts for the S, I, and F-funds above.
If seasonality is going to play a role in the market this winter, the rally may have an advantage through the end of next week, but then things change in the second half of February.
Chart provided courtesy of www.sentimentrader.com
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
Daily Market Commentary Archives
To get weekly or daily notifications when we post new commentary, sign up HERE.
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.
[TABLE="align: center"]
[TR]
[TD="align: center"]
[TD]
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[TD="width: 338, align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
Favorable earnings after the bell from Disney and chip maker Arm will likely push the S&P 500 over 5000 mark today, so the media will be happy. The hype could also draw new money into the market and perhaps we will get an emotional "blow off" top, or at least a pop before any meaningful pullback. You never know, but if it does gap above 5000 this morning and hold, it would be more of an exception than a tendency since many 1000 handle milestones have been met with some churning below the number before a major breakout, although 4000 was one of those exceptions.
With 5K potentially behind us, we have to wonder if small caps and the I-fund have hit a wall, or is a big breakout brewing? The charts look very good as they consolidate in healthy formations after the giant rally at the end of 2023. I'm as nervous as anyone, as I explained yesterday regarding indicator warning signs, but it's tough to deny the bullish chart patterns we see forming on the S, I, and F-funds. They just have a little work to do to get above resistance.
The 10-year Treasury Yield was up slightly yesterday after finding support at the 200-day EMA again, and that put direct pressure on the F-fund.
The dollar was down and the pullback filled in a small open gap, but there are still open gaps all over this chart.
Following up on the recent strength in the market leading Dow Transportation Index, a breakout to a multi-month high was swatted back down yesterday with a negative reversal so perhaps a double top pullback is going to start now. It looks more like a cup and handle formation and they do tend to break to the upside so this may be a temporary pause.
As I said, earnings after the bell last night might set up a breakout above 5000 for the S&P 500, and that's all good, but if the rest of the market doesn't start coming along for the ride, the market rally in general could run out of steam. However, those charts look good so I'm optimistic, although still nervous and not married to any position.
The S&P 500 (C-fund) remains in the rising trading channel after tagging the top of it again yesterday. Disney's earnings may push this higher, maybe even above the channel, but it will be the close that counts. If we see a big rally early that fails late in the day, take it as a warning. It it can close above 5000, maybe there's more room to rally.
I posted smaller versions of the charts for the S, I, and F-funds above.
If seasonality is going to play a role in the market this winter, the rally may have an advantage through the end of next week, but then things change in the second half of February.
Chart provided courtesy of www.sentimentrader.com
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
Daily Market Commentary Archives
To get weekly or daily notifications when we post new commentary, sign up HERE.
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.
