It was a choppy session of trading on Monday that ended with some late selling to pull most of the indices down into negative territory by the close. Small caps gave up a big intraday gain to close flat, and it was the leading fund yesterday. The I-fund and F-fund were both down modestly, so as bad as all the red looks, it was a fairly flat day for stocks that was marred by some late selling which may have created technical issues on some of the charts.
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On the docket this week; Fed Chair Jerome Powell will give his semi-annual monetary policy testimony to the House and Senate beginning on Wednesday. On Friday we will get the February jobs report. It would have been nice to get Powell's commentary after the jobs report, but he may know the numbers by then anyway.
The 10-year Treasury Yield traded within Friday's large trading range making it an "inside day", meaning the high and low yesterday was inside the high and low from Friday. It's generally considered a continuation pattern. Perhaps the bull flag formation isn't dead after Friday's steep decline down to the 50-day EMA, which held yesterday and keeps the flag alive. There's a good technical case for this yield to remain buoyant, but the Fed's testimony on Wednesday could shake things up.
The dollar has been a little heavy of late and it is trying to hold above that 20-day EMA which has been tested almost every day over the last two weeks. There was a similar test in early January that ended with a rally.
The small caps of the Russell 2000 made new highs late last week and yesterday it got off to a great start before rolling over late with the rest of the market, creating a negative reversal day. Now it is retesting the breakout area and whichever way this resolves itself, above or below that 205 area, could tell us whether or not a pullback it brewing. This isn't the S-fund, but almost all stocks that are in the Russell 2000 are also in the S-fund.
For giggles, here are a couple of charts of bitcoin. Bitcoin matters because it is a good barometer for investors' appetite for risk, and right now it is risk on for the crypto crowd. Those are some giant gains in the last 6, 12, and 18 months. But...
... this 2+ year chart shows it has just gotten back to its all time highs. Now the question is how quickly it can break out to new highs, or if we'll see a meaningful pullback from here. This is a good illustration of why double tops occur. Think of all the people who may have been buying bitcoin back in late 2021 over $65,000 and are just getting their money back. Many will be happy to be even and take some off the table, so we'll see.
Yesterday I mentioned this worst week tendency info (see below), and guess what? I was wrong officially about the dates, but the sentiment may still be there! One of our members corrected me. There were only 4 Fridays in February. My brain was thinking last Friday was still February. So, this little seasonal tendency may not officially qualify this year in February, but I don't believe there can be 5 Fridays in February unless it is a Leap Year, and this is a Leap Year so technically it may still qualify. If February 1st was on a Friday instead of a Thursday it would have been a valid Nasty 7 week, so how much that matters, I don't know. It's just an quirky stat that may or may not be plausible, but interesting. So, officially it's not a Nasty 7 week based on the criteria of the article. Sorry! That said, the week started poorly anyway.
[TD="align: left"] I believe that I have mentioned this before at some point, but this week is considered one of the seven worst weeks of the year, based on this article that explains the reasoning: Worst Weeks
According to the article:
"This study uses weekly closing prices for the S&P 500 Index going back to October 27, 1967. The Nasty 7 are the week after:"
January Week 1
February Week 5
March Week 3
June Week 3
July Week 5
September Week 3
October Week 3
February did have 5 Friday's and that makes this week qualify as one of those weeks listed, for what it's worth.
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The S&P 500 (C-fund) tested the top of the rising channel yesterday and backed off a bit. We have had a series of sharp rallies followed by a few days of backing and filling, so that may be what we're about to witness. The question here is whether a pullback would come all the way down to fill in that large open gap below 5000, which at this point would push it below its 20-day EMA and it has only closed below that average one time since early November.
The arrows above represent negative reversal days on the chart. The red arrows led to weakness, as we would expect from a negative reversal day, but the blue arrows were times where the negative reversal uncharacteristically bounced back immediately.
DWCPF (S-fund) also posted a negative reversal day despite not closing down on the day. It's still above the breakout area, and in a tight ascending trading channel, so no damage has been done here, although the negative reversal day could be a bad omen. Watch 2030 as an important support area.
The EFA (I-fund) posted an inside day as it traded within Friday's large candlestick range. This looks good, although maybe a little overbought in the short-term. Especially if that UUP chart up above bounces off that 20-day EMA.
BND (bonds / F-fund) also created one of those inside days, which should be bullish for bonds since it is a continuation pattern, and bonds have been creeping up slowly for a while. The one downside may be that it closed back below the top of that flag pattern. However, that is subjective here as it is based on how I drew my support and resistance lines.
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.
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On the docket this week; Fed Chair Jerome Powell will give his semi-annual monetary policy testimony to the House and Senate beginning on Wednesday. On Friday we will get the February jobs report. It would have been nice to get Powell's commentary after the jobs report, but he may know the numbers by then anyway.
The 10-year Treasury Yield traded within Friday's large trading range making it an "inside day", meaning the high and low yesterday was inside the high and low from Friday. It's generally considered a continuation pattern. Perhaps the bull flag formation isn't dead after Friday's steep decline down to the 50-day EMA, which held yesterday and keeps the flag alive. There's a good technical case for this yield to remain buoyant, but the Fed's testimony on Wednesday could shake things up.
The dollar has been a little heavy of late and it is trying to hold above that 20-day EMA which has been tested almost every day over the last two weeks. There was a similar test in early January that ended with a rally.
The small caps of the Russell 2000 made new highs late last week and yesterday it got off to a great start before rolling over late with the rest of the market, creating a negative reversal day. Now it is retesting the breakout area and whichever way this resolves itself, above or below that 205 area, could tell us whether or not a pullback it brewing. This isn't the S-fund, but almost all stocks that are in the Russell 2000 are also in the S-fund.
For giggles, here are a couple of charts of bitcoin. Bitcoin matters because it is a good barometer for investors' appetite for risk, and right now it is risk on for the crypto crowd. Those are some giant gains in the last 6, 12, and 18 months. But...
... this 2+ year chart shows it has just gotten back to its all time highs. Now the question is how quickly it can break out to new highs, or if we'll see a meaningful pullback from here. This is a good illustration of why double tops occur. Think of all the people who may have been buying bitcoin back in late 2021 over $65,000 and are just getting their money back. Many will be happy to be even and take some off the table, so we'll see.
Yesterday I mentioned this worst week tendency info (see below), and guess what? I was wrong officially about the dates, but the sentiment may still be there! One of our members corrected me. There were only 4 Fridays in February. My brain was thinking last Friday was still February. So, this little seasonal tendency may not officially qualify this year in February, but I don't believe there can be 5 Fridays in February unless it is a Leap Year, and this is a Leap Year so technically it may still qualify. If February 1st was on a Friday instead of a Thursday it would have been a valid Nasty 7 week, so how much that matters, I don't know. It's just an quirky stat that may or may not be plausible, but interesting. So, officially it's not a Nasty 7 week based on the criteria of the article. Sorry! That said, the week started poorly anyway.
[TD="align: left"] I believe that I have mentioned this before at some point, but this week is considered one of the seven worst weeks of the year, based on this article that explains the reasoning: Worst Weeks
According to the article:
"This study uses weekly closing prices for the S&P 500 Index going back to October 27, 1967. The Nasty 7 are the week after:"
January Week 1
February Week 5
March Week 3
June Week 3
July Week 5
September Week 3
October Week 3
February did have 5 Friday's and that makes this week qualify as one of those weeks listed, for what it's worth.
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[/TD]
The S&P 500 (C-fund) tested the top of the rising channel yesterday and backed off a bit. We have had a series of sharp rallies followed by a few days of backing and filling, so that may be what we're about to witness. The question here is whether a pullback would come all the way down to fill in that large open gap below 5000, which at this point would push it below its 20-day EMA and it has only closed below that average one time since early November.
The arrows above represent negative reversal days on the chart. The red arrows led to weakness, as we would expect from a negative reversal day, but the blue arrows were times where the negative reversal uncharacteristically bounced back immediately.
DWCPF (S-fund) also posted a negative reversal day despite not closing down on the day. It's still above the breakout area, and in a tight ascending trading channel, so no damage has been done here, although the negative reversal day could be a bad omen. Watch 2030 as an important support area.
The EFA (I-fund) posted an inside day as it traded within Friday's large candlestick range. This looks good, although maybe a little overbought in the short-term. Especially if that UUP chart up above bounces off that 20-day EMA.
BND (bonds / F-fund) also created one of those inside days, which should be bullish for bonds since it is a continuation pattern, and bonds have been creeping up slowly for a while. The one downside may be that it closed back below the top of that flag pattern. However, that is subjective here as it is based on how I drew my support and resistance lines.
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.
