]Stocks fell sharply again on Tuesday, resuming the sell off from last week. So much for post holiday reversal or a Turnaround Tuesday. We're seeing some indices still holding above their 50-day EMA but small caps gave up the ghost on that one yesterday as it fell, and closed, below its 50-day average. The Dow lost 632-points, and percentage-wise, that 2.3% loss was the best of the three major indices. The Nasdaq lagged again with a loss over 4%, and it's now 10% below its highs. Bonds were up modestly.
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Stocks didn't bounce back after the holiday but the Tuesday after Labor Day weekend is generally a lighter than normal trading day and it takes a few days for things to get back from the late summer slow down. That may be an excuse why stocks didn't reverse back up like a typical post holiday reversal might, but it's hard to give credibility to that theory since volatility was so high and even folks on vacation were probably watching closely and reacting.
We know stocks were down and we'll take a look at those charts down below, but part of the decline has been due to a bounce in the dollar recently, and yesterday UUP gained 0.52% to push above two resistance lines, although it is still below the 50-day EMA.
But anytime the dollar is rising there is some additional pressure on anything priced in dollars, and we've seen that lately with the sharp decline in the price of oil, and the recently high flying price of lumber, which has come down almost 25% since the late August highs.
Given how far this market has run, there is nothing really wrong with this pullback, but the bulls will like to see the 50-day EMAs hold on the major indices, because the next stop - the 200-day EMAs, are a long way down. The small caps have already fallen below the 50-day EMA while the S&P and Nasdaq are right there, so it's close to do or die time for the bulls to make a stand.
The recent plunges in many of the large tech stocks like Tesla, Apple, MSFT, and GOOG need to slow down because it may be tough for the broader market to do too much without these, since they are such a big part of the S&P 500 and Nasdaq.
The futures opened down sharply on Tuesday evening, but in a fast moving market, that may not mean much by Wednesday morning's opening bell.
The S&P 500 (C-fund) fell through another level of support (red) but held onto the 50-day EMA for another day. If the 50-day EMA can't hold, there's a long way down to the 200-day EMA. There are a couple more small open gaps below. I didn't mark them but they are near 3300 and 3280. Technically, yesterday did not create a visible open gap, but some would consider the gap between Friday's close and yesterday's high an open gap (blue box). Precipitous declines don't tend to head straight back up, but if the 50-day EMA can hold, we could see a few relief rallies and retests of the area to stabilize a low. But if the 3300 area fails... :^/
The DWCPF (S-fund) fell right through that 50-day EMA, and also opened one of those stealth gaps in that blue box between Friday's close and Tuesday's high.
The EFA (I-fund) held up a little better than the U.S. stocks and also held at its 50-day EMA and rising support line.
The Dow Transportation Index also held up a lot better than the broader indices and remains well above its 50-day EMA, so that's one positive sign for the market - if this economically sensitive index can hold above support.
The VIX was up but not by much, considering the losses in the S&P 500, and it closed well off its highs for a possible reversal.
BND (F-fund) was up modestly after Friday's sell-off. The action may be creating an ugly looking bear flag, however.
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
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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Stocks didn't bounce back after the holiday but the Tuesday after Labor Day weekend is generally a lighter than normal trading day and it takes a few days for things to get back from the late summer slow down. That may be an excuse why stocks didn't reverse back up like a typical post holiday reversal might, but it's hard to give credibility to that theory since volatility was so high and even folks on vacation were probably watching closely and reacting.
We know stocks were down and we'll take a look at those charts down below, but part of the decline has been due to a bounce in the dollar recently, and yesterday UUP gained 0.52% to push above two resistance lines, although it is still below the 50-day EMA.
But anytime the dollar is rising there is some additional pressure on anything priced in dollars, and we've seen that lately with the sharp decline in the price of oil, and the recently high flying price of lumber, which has come down almost 25% since the late August highs.
Given how far this market has run, there is nothing really wrong with this pullback, but the bulls will like to see the 50-day EMAs hold on the major indices, because the next stop - the 200-day EMAs, are a long way down. The small caps have already fallen below the 50-day EMA while the S&P and Nasdaq are right there, so it's close to do or die time for the bulls to make a stand.
The recent plunges in many of the large tech stocks like Tesla, Apple, MSFT, and GOOG need to slow down because it may be tough for the broader market to do too much without these, since they are such a big part of the S&P 500 and Nasdaq.
The futures opened down sharply on Tuesday evening, but in a fast moving market, that may not mean much by Wednesday morning's opening bell.
The S&P 500 (C-fund) fell through another level of support (red) but held onto the 50-day EMA for another day. If the 50-day EMA can't hold, there's a long way down to the 200-day EMA. There are a couple more small open gaps below. I didn't mark them but they are near 3300 and 3280. Technically, yesterday did not create a visible open gap, but some would consider the gap between Friday's close and yesterday's high an open gap (blue box). Precipitous declines don't tend to head straight back up, but if the 50-day EMA can hold, we could see a few relief rallies and retests of the area to stabilize a low. But if the 3300 area fails... :^/
The DWCPF (S-fund) fell right through that 50-day EMA, and also opened one of those stealth gaps in that blue box between Friday's close and Tuesday's high.
The EFA (I-fund) held up a little better than the U.S. stocks and also held at its 50-day EMA and rising support line.
The Dow Transportation Index also held up a lot better than the broader indices and remains well above its 50-day EMA, so that's one positive sign for the market - if this economically sensitive index can hold above support.
The VIX was up but not by much, considering the losses in the S&P 500, and it closed well off its highs for a possible reversal.
BND (F-fund) was up modestly after Friday's sell-off. The action may be creating an ugly looking bear flag, however.
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
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.
