We got some follow through on the downside after Wednesday's negative reversal day. A midday rally was impressive but it ran out of steam in the final hour of trading. Stocks closed off their lows making for some interesting formations near some support, so today's options expiration Friday should be interesting, as usual. The Dow lost 252-points. Small caps lagged, and more weakness in the dollar saw the I-fund hold up well again. Bonds were down as yields were up slightly.
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Another Fed Governor, Lael Brainard, was spreading more hawkish commentary to keep shake things up. She insisted that the Fed won't waiver from their commitment to keep inflation under control. That's not what the market wants to hear as the economy shows signs of wilting.
That led to yields moving higher, although they still settled the day below the early December lows, after Wednesday's breakdown. The dollar was also down and it remains near the recent lows.
Yesterday's action was interesting in that the S&P 500 Index closed off the highs, but also off the lows creating one of those spinning top formations, which is a sign of indecision. They are often seen around market turning points. With today being an options expiration week, a day that can be wild because of expiring contracts, we might not get an instant technical analysis gratification, but you can see that these spinning tops do appear near many turning points.
The Dow Transportation Index had a poor day yesterday as it backed off further from resistance that has been holding since mid-November. It does look like a possible inverted head and shoulders pattern, so the bulls will want to see that 200-day, and / or 50-day EMA hold during this pullback, to complete the formation of a right shoulder.
The futures were up after the bell yesterday after Netflix reported earnings, but the elephant in the room, and this may be resolved by the time you read this, is whether the debt ceiling will be raised again rather than risking a credit downgrade and / or a default on some of the US debt. The VIX (volatility index) has remained relatively low, which is surprising considering the consequences of inaction.
The S&P 500 (C-fund) continued to pull back from the resistance of the 200-day moving averages yesterday with a gap down open. It fought its way back to fill that gap with a midday rally, but that was the best it could do as the selling resumed. It closed just south of the 50-day EMA and that 3900 area that has been in the picture for many months now, either as support or resistance. The rising channel off the lows is still intact and 3850 / 3800 would be key support should the downside persist.
The DWCPF (S-fund) started to create that right shoulder of the inverted head and shoulders pattern, as we talked about yesterday. Now it is imperative that the 1625 area hold to keep that H&S pattern intact.
The EFA / I-fund held up well again as the dollar continues its slide. It did fall below some resistance during Wednesday's sell off, but the resistance is rising. As is support and that 69 area looks important, although the 50 and 200-day EMAs are below that for more possible support should 69 fail.
BND (bonds / F-fund) pulled back from Wednesday's big rally and there is still an open gap a few ticks below yesterday's lows. 74 looks to be the key support area here and bonds continue to look good for 2023.
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 so much for reading. Have a great weekend!
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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Another Fed Governor, Lael Brainard, was spreading more hawkish commentary to keep shake things up. She insisted that the Fed won't waiver from their commitment to keep inflation under control. That's not what the market wants to hear as the economy shows signs of wilting.
That led to yields moving higher, although they still settled the day below the early December lows, after Wednesday's breakdown. The dollar was also down and it remains near the recent lows.
Yesterday's action was interesting in that the S&P 500 Index closed off the highs, but also off the lows creating one of those spinning top formations, which is a sign of indecision. They are often seen around market turning points. With today being an options expiration week, a day that can be wild because of expiring contracts, we might not get an instant technical analysis gratification, but you can see that these spinning tops do appear near many turning points.
The Dow Transportation Index had a poor day yesterday as it backed off further from resistance that has been holding since mid-November. It does look like a possible inverted head and shoulders pattern, so the bulls will want to see that 200-day, and / or 50-day EMA hold during this pullback, to complete the formation of a right shoulder.
The futures were up after the bell yesterday after Netflix reported earnings, but the elephant in the room, and this may be resolved by the time you read this, is whether the debt ceiling will be raised again rather than risking a credit downgrade and / or a default on some of the US debt. The VIX (volatility index) has remained relatively low, which is surprising considering the consequences of inaction.
The S&P 500 (C-fund) continued to pull back from the resistance of the 200-day moving averages yesterday with a gap down open. It fought its way back to fill that gap with a midday rally, but that was the best it could do as the selling resumed. It closed just south of the 50-day EMA and that 3900 area that has been in the picture for many months now, either as support or resistance. The rising channel off the lows is still intact and 3850 / 3800 would be key support should the downside persist.
The DWCPF (S-fund) started to create that right shoulder of the inverted head and shoulders pattern, as we talked about yesterday. Now it is imperative that the 1625 area hold to keep that H&S pattern intact.
The EFA / I-fund held up well again as the dollar continues its slide. It did fall below some resistance during Wednesday's sell off, but the resistance is rising. As is support and that 69 area looks important, although the 50 and 200-day EMAs are below that for more possible support should 69 fail.
BND (bonds / F-fund) pulled back from Wednesday's big rally and there is still an open gap a few ticks below yesterday's lows. 74 looks to be the key support area here and bonds continue to look good for 2023.
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 so much for reading. Have a great weekend!
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.
