fter stalling at key resistance, stocks resumed their downside action with another round of selling on Friday. We did see a couple of attempts to push the indices higher, and that may be a result of some short-term oversold conditions, but the fear of headlines has kept the buyers at bay. The Dow lost 180-points on Friday with small caps, and the poor I-fund taking the worst of it. The 0.76% rally in the dollar didn't help. Bonds rallied.
[TABLE="align: center"]
[TR]
[TD="align: center"]
[/TD]
[TD]
[/TD]
[TD="width: 338, align: center"] Daily TSP Funds Return
[TABLE="align: center"]
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
Despite the loss on Friday, the S&P 500 (C-fund) did make a modest positive reversal day, and that was a surprise given the fact that we were heading into the weekend with so much uncertainty in the air. But positive reversal days are only short-term indications of direction, and with so much overhead resistance in this bearish, down trending market, it's tough to be bullish. The market is in a sell the rallies mode until proven otherwise.
The DWCPF (small caps / S-fund) continues to get pounded on the down days, while seeing a few explosive rallies on the days where the bears take the day off. The chart says it all - it's in a downtrend and resistance is formidable. The low on the 24th may be a short-term low, but we can't rule out a test of the low before we see any kind of a breakout to the upside.
The EFA (I-fund) took a major hit on Friday with the dollar moving sharply higher. This chart has been in a waterfall-like decline since early February, and well before the Russian invasion, although the threat of war has been out there for some time. The opening move lower on Friday created a nearly 2-point open gap on the chart.
There are a few open gaps from back in 2020 that may be in play again. If they get filled that would be a lot of damage being done to the I-fund, but potentially great opportunities for the bulls who are patient.
BND (Bonds / F-fund) rallied again as these volatile up and down moves fill and open gaps all over this chart. The red gaps are open, the blue are filled. The trend is down, but yields have to hold and we're watching 1.7% on the 10-year Treasury yield.
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 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.
[TABLE="align: center"]
[TR]
[TD="align: center"]
[TD]
[/TD]
[TD="width: 338, align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The February jobs report was a surprise on the upside with 678,000 new jobs created, well above the 400K that was estimated. The unemployment rate also came in a tick lower than the 3.9% expected. But investors looked right past that and focused on the geopolitical headlines -- and the rising price of oil.
The yield on the 10-year Treasury was an example of that as you'd expect the yield to move higher on a big jobs number like we saw, but instead the yield tanked as if the economy was under tremendous pressure. The TNX is hanging onto that 1.7% area that has a couple of layers of support nearby. It will be interesting to see if that holds this week.
The dollar has gone straight up since the Russian invasion, and that has put the pressure on stocks - the I-fund particularly, while the safety trade has kept commodity prices rising despite the strength in the dollar.
I've been looking at the chart of the S&P 500 in a couple of ways, and the day of the Russian invasion has either skewed a common formation, or created a new one. Since the low on February 24th, day of the invasion, we can see a possible bull flag forming.
However, if we didn't get that dramatic reversal day of trading - for instance if it happened over the weekend or on a holiday, the S&P could be considered to be in a bear flag, and not a bull flag.
The Dow Transportation Index is generally a good barometer for the rest of the market and is considered one of the market leaders. On Friday it nearly got back all of the morning losses after holding at its 200-day EMA, but you can see that there is a lot of overhead resistance, so there's work to be done. It's either at the top of its descending trading channel, or on the verge of a breakout.
The seasonality chart for March is a mess and a lot of those wide gains and losses on that chart reflecting the crazy volatility we saw in March of 2020 when COVID destroyed the market.
Chart provided courtesy of www.sentimentrader.com
So if we just look at just the percentage of times positive over the last 30 years, we're actually entering in a modestly bullish part of March, but it only lasts about a week.
Chart provided courtesy of www.sentimentrader.com
A reminder that, except for some days surrounding specific holidays, seasonality is not a primary indicator. It is just a breeze in the face of, or at the backs of, the market that could nudge it one way or the other. The chart suggests that this week the market may have a slight breeze coming from behind, but we also have some storms around us that may make it tough to feel that breeze.
We get another CPI Report (Consumer price Index) on Thursday, and the Fed, and the stock market will certainly be looking toward this for more guidance on inflation.
The yield on the 10-year Treasury was an example of that as you'd expect the yield to move higher on a big jobs number like we saw, but instead the yield tanked as if the economy was under tremendous pressure. The TNX is hanging onto that 1.7% area that has a couple of layers of support nearby. It will be interesting to see if that holds this week.
The dollar has gone straight up since the Russian invasion, and that has put the pressure on stocks - the I-fund particularly, while the safety trade has kept commodity prices rising despite the strength in the dollar.
I've been looking at the chart of the S&P 500 in a couple of ways, and the day of the Russian invasion has either skewed a common formation, or created a new one. Since the low on February 24th, day of the invasion, we can see a possible bull flag forming.
However, if we didn't get that dramatic reversal day of trading - for instance if it happened over the weekend or on a holiday, the S&P could be considered to be in a bear flag, and not a bull flag.
The Dow Transportation Index is generally a good barometer for the rest of the market and is considered one of the market leaders. On Friday it nearly got back all of the morning losses after holding at its 200-day EMA, but you can see that there is a lot of overhead resistance, so there's work to be done. It's either at the top of its descending trading channel, or on the verge of a breakout.
The seasonality chart for March is a mess and a lot of those wide gains and losses on that chart reflecting the crazy volatility we saw in March of 2020 when COVID destroyed the market.
Chart provided courtesy of www.sentimentrader.com
So if we just look at just the percentage of times positive over the last 30 years, we're actually entering in a modestly bullish part of March, but it only lasts about a week.
Chart provided courtesy of www.sentimentrader.com
A reminder that, except for some days surrounding specific holidays, seasonality is not a primary indicator. It is just a breeze in the face of, or at the backs of, the market that could nudge it one way or the other. The chart suggests that this week the market may have a slight breeze coming from behind, but we also have some storms around us that may make it tough to feel that breeze.
We get another CPI Report (Consumer price Index) on Thursday, and the Fed, and the stock market will certainly be looking toward this for more guidance on inflation.
Despite the loss on Friday, the S&P 500 (C-fund) did make a modest positive reversal day, and that was a surprise given the fact that we were heading into the weekend with so much uncertainty in the air. But positive reversal days are only short-term indications of direction, and with so much overhead resistance in this bearish, down trending market, it's tough to be bullish. The market is in a sell the rallies mode until proven otherwise.
The DWCPF (small caps / S-fund) continues to get pounded on the down days, while seeing a few explosive rallies on the days where the bears take the day off. The chart says it all - it's in a downtrend and resistance is formidable. The low on the 24th may be a short-term low, but we can't rule out a test of the low before we see any kind of a breakout to the upside.
The EFA (I-fund) took a major hit on Friday with the dollar moving sharply higher. This chart has been in a waterfall-like decline since early February, and well before the Russian invasion, although the threat of war has been out there for some time. The opening move lower on Friday created a nearly 2-point open gap on the chart.
There are a few open gaps from back in 2020 that may be in play again. If they get filled that would be a lot of damage being done to the I-fund, but potentially great opportunities for the bulls who are patient.
BND (Bonds / F-fund) rallied again as these volatile up and down moves fill and open gaps all over this chart. The red gaps are open, the blue are filled. The trend is down, but yields have to hold and we're watching 1.7% on the 10-year Treasury yield.
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 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.
