It was a crazy ending to a wild week for stocks on Friday, culminating with a final 15 minute rally the likes of which I don't recall ever seeing before. Other than the Nasdaq, the indices were mostly green all day, with decent gains at the intraday highs during the trading day. A curious late spike higher took the gains to another level and the Dow ended the day up 453-points, and all three TSP stock funds gained over 1.5% for the day.
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With about 15 minutes to go in the day on Friday, the S&P 500 was up about 35 points so it was looking good for the bulls. Then something odd happened. That large gain nearly doubled to a 65-point gain in those final 15 minutes.
Rumors were that a large trader out of Korea was liquidated a $15 billion position on Friday. Once that was done, combined with the wrapping up of the end of quarter, out of stocks and into bonds, pension fund rebalancing , it may have triggered that late spring higher as the selling was completed. That's just my assumption (pure speculation.) Whatever it was, it pushed the S&P 500 up to a new closing high, and we'll start this week in an interesting situation. Will the late spike trigger profit selling to start the day on Monday, or will there be some piling on to the buy side as the rebalancing selling pressure subsides?
Internally, the advancing volume was about 3 to 2 in favor of advancers over decliners on the NYSE, and only about 7 to 6 advancing over declining on the Nasdaq, so it wasn't as broad of a rally as it may have appeared.
As for the fundamentals, the yield on the 10-year went up again, but it didn't seem to negatively impact the growth stocks, but what happens if we see 1.7% again?
The price of oil also bounced back from Thursday's sell off. The price of oil is typically a good barometer for the strength of the economy as demand starts to increase in good times. Friday's rally in oil may have had as much to do with that as a possible supply issue as they continue to try to dig out the cargo ship from the Suez Canal.
The VIX (volatility index) is falling because of the decrease in fear from investors, but clearly the volatility is still here with big swings happening in both direction over the last two weeks, and probably two months is more accurate. I'm not sure I'm in love with either direction as a holding position right now. It seems to be more of a decent trading environment - if you're on the right side. What's working for the next couple of days may or may not be what's working a week from now. What the bulls would prefer here is a more steady, quieter "grind" higher, rather than a 3 steps up, two steps back approach.
Friday is a market holiday but from what I'm seeing the March jobs report, which is normally scheduled on the first Friday of each month, may be released that day despite the holiday on Wall Street. I'll have to double check on that because briefing.com doesn't show it.
Because the market is closed on Friday, I won't be posting a market commentary that day.
March Madness contest links: More Info. Yahoo! Tourney Pick'em.
The S&P 500 (C-fund) actually closed at an all-time high after that bizarre late spike up on Friday. Last week's positive reversal showed us again that the 50-day EMA is a force to be reckoned with in a bull market. We could see temporary breaks that can scare us out, but that's why I normally like to see 3 to 5 closes below support (or above resistance) before calling it an official breakdown. The resistance part may be tested this week as the S&P vies for new intraday highs above 3985.
The DWCPF (small caps / S-fund) has been in the right shoulder of a head and shoulders pattern for weeks now, and it's debatable whether we completed the right shoulder in that red circle, and this move higher (in the blue circle) is a test of the head that could still fail. Or it could all be one big right shoulder (black). The difference is, a failed head test has a lot more of a negative connotation.
The EFA (I-Fund) gapped up on Friday after it had another successful test of the 50-day EMA. That could be a bearish rising wedge forming, but it could also have a lot more filling in to do before any signs of a breakdown. A move over 77 toward 78 would come up against some tough resistance, but that would be a nice gain if it can get there.
The Dow Transportation Index, one of the more economically sensitive indexes, made yet another all time high with an impressive 2.3% rally on Friday. It's now firmly back in that rising channel, after two false breakdowns.
The HYG High Yield Bond Fund continues its rally off the recent lows, and this is a good sign for stocks, but this could be another one of those head tests for this head and shoulders pattern, so the bulls will want to see this get passed the middle of the head, or about 87.20 or higher.
The VIX fell back below 19 during that late buying frenzy on Friday. That's now 5 closes below 20 in the last 9 days. Is 19 the new support level, or will that level get taken out next?
BND (bonds / F-fund) was down on Friday as yields resumed their move higher. The 20-day EMA acted as resistance and that could be a bear flag, which could be a bad sign for the F-fund this week.
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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With about 15 minutes to go in the day on Friday, the S&P 500 was up about 35 points so it was looking good for the bulls. Then something odd happened. That large gain nearly doubled to a 65-point gain in those final 15 minutes.
Rumors were that a large trader out of Korea was liquidated a $15 billion position on Friday. Once that was done, combined with the wrapping up of the end of quarter, out of stocks and into bonds, pension fund rebalancing , it may have triggered that late spring higher as the selling was completed. That's just my assumption (pure speculation.) Whatever it was, it pushed the S&P 500 up to a new closing high, and we'll start this week in an interesting situation. Will the late spike trigger profit selling to start the day on Monday, or will there be some piling on to the buy side as the rebalancing selling pressure subsides?
Internally, the advancing volume was about 3 to 2 in favor of advancers over decliners on the NYSE, and only about 7 to 6 advancing over declining on the Nasdaq, so it wasn't as broad of a rally as it may have appeared.
As for the fundamentals, the yield on the 10-year went up again, but it didn't seem to negatively impact the growth stocks, but what happens if we see 1.7% again?
The price of oil also bounced back from Thursday's sell off. The price of oil is typically a good barometer for the strength of the economy as demand starts to increase in good times. Friday's rally in oil may have had as much to do with that as a possible supply issue as they continue to try to dig out the cargo ship from the Suez Canal.
The VIX (volatility index) is falling because of the decrease in fear from investors, but clearly the volatility is still here with big swings happening in both direction over the last two weeks, and probably two months is more accurate. I'm not sure I'm in love with either direction as a holding position right now. It seems to be more of a decent trading environment - if you're on the right side. What's working for the next couple of days may or may not be what's working a week from now. What the bulls would prefer here is a more steady, quieter "grind" higher, rather than a 3 steps up, two steps back approach.
Friday is a market holiday but from what I'm seeing the March jobs report, which is normally scheduled on the first Friday of each month, may be released that day despite the holiday on Wall Street. I'll have to double check on that because briefing.com doesn't show it.
Because the market is closed on Friday, I won't be posting a market commentary that day.
March Madness contest links: More Info. Yahoo! Tourney Pick'em.
The S&P 500 (C-fund) actually closed at an all-time high after that bizarre late spike up on Friday. Last week's positive reversal showed us again that the 50-day EMA is a force to be reckoned with in a bull market. We could see temporary breaks that can scare us out, but that's why I normally like to see 3 to 5 closes below support (or above resistance) before calling it an official breakdown. The resistance part may be tested this week as the S&P vies for new intraday highs above 3985.
The DWCPF (small caps / S-fund) has been in the right shoulder of a head and shoulders pattern for weeks now, and it's debatable whether we completed the right shoulder in that red circle, and this move higher (in the blue circle) is a test of the head that could still fail. Or it could all be one big right shoulder (black). The difference is, a failed head test has a lot more of a negative connotation.
The EFA (I-Fund) gapped up on Friday after it had another successful test of the 50-day EMA. That could be a bearish rising wedge forming, but it could also have a lot more filling in to do before any signs of a breakdown. A move over 77 toward 78 would come up against some tough resistance, but that would be a nice gain if it can get there.
The Dow Transportation Index, one of the more economically sensitive indexes, made yet another all time high with an impressive 2.3% rally on Friday. It's now firmly back in that rising channel, after two false breakdowns.
The HYG High Yield Bond Fund continues its rally off the recent lows, and this is a good sign for stocks, but this could be another one of those head tests for this head and shoulders pattern, so the bulls will want to see this get passed the middle of the head, or about 87.20 or higher.
The VIX fell back below 19 during that late buying frenzy on Friday. That's now 5 closes below 20 in the last 9 days. Is 19 the new support level, or will that level get taken out next?
BND (bonds / F-fund) was down on Friday as yields resumed their move higher. The 20-day EMA acted as resistance and that could be a bear flag, which could be a bad sign for the F-fund this week.
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.
