The choppy action continued on Monday as we saw back and forth swings during the day that culminated with the S&P 500 closing basically flat on the day, the Dow and Nasdaq down slightly, but small caps (S-fund) were beaten down a bit to the tune of 1%. It was mostly a stalemate but there may have been a winner at the end of the day, but it took an outside influence after the bell to declare it.
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Chart provided courtesy of www.sentimentrader.com
This year we have a different situation than we've had in many years, and that is the decimation of the bond market in recent months, with no real end in sight as long as inflation and rising interest rates are still a concern. But as Fed President Bullard said, it could be priced in already (but who really knows?)
It has become clear that the stock market has some correlation to the action in bitcoin. Basically if there is a "risk on" attitude, both stocks and bitcoin tend to rally. And if it's "risk off" they've both struggled. Well, yesterday bitcoin was down sharply early but it rebounded and closed positive for a positive outside reversal day.
If that upside momentum can continue in the coming days, I think that bodes well for the stock market.
The S&P 500 (C-fund) was flat yesterday keeping it within a very tight range since last week where it has been trading between the 50 and 200-day EMAs. It closed just below that 200-day EMA for a second straight day yesterday, and the high of the day was right on that average, so it did act as resistance. There's a lot of resistance near 4455 and and the 4375 area seems to trying to hold as the lower end of the range, but the next major support area may be closer to 4300 if we do see a breakdown.
DWCPF (S-fund / small caps) took a 1% hit yesterday and while it did make a lower low out of the recent short-term trading range, it did close within that red box. The open gaps are in blue and there is still one above and below the current level. It trades below all of the key moving averages so the bears still have control and the bulls have some work to do.
The EFA (I-fund) has been trending lower with some of that being because of the recent strength in the dollar. If we're looking for a silver lining here it is possible to consider the current trading channel to be part of the handle of a potential cup and handle formation, so a breakout to the upside may not be too much of a surprise, but because this too is trading below all of the major moving averages, the bears still have the ball here as well.
BND (Bonds / F-fund) was down again and the technical picture still looks poor here, except for maybe the possibility of a move back to the top of the descending channel at some point. But until that channel breaks to the upside, this looks like a do not touch fund.
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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After the bell Fed President Bullard was being interviewed and stated that the markets may have priced in the interest rate hikes already and said the economy will grow above trend. The futures quickly shot up after the bell yesterday and erased the Monday losses (S&P futures were up 15), but of course that doesn't count in our TSP accounts until today's closing bell rings, and that's an eternity in stock market time.
Most of the charts that we post saw little change as the consolidation near the recent pullback lows continued.
According to Tom Lee, a trillion dollars were paid in taxes yesterday, the last day to file your 2021 taxes, and that may have accounted for some of the pressure in stocks recently. The days following the annual IRS tax deadline (normally the 15th of April) generally have a decent record, but earnings season also comes into play this time in April, so that has an impact as well.Most of the charts that we post saw little change as the consolidation near the recent pullback lows continued.
Chart provided courtesy of www.sentimentrader.com
This year we have a different situation than we've had in many years, and that is the decimation of the bond market in recent months, with no real end in sight as long as inflation and rising interest rates are still a concern. But as Fed President Bullard said, it could be priced in already (but who really knows?)
It has become clear that the stock market has some correlation to the action in bitcoin. Basically if there is a "risk on" attitude, both stocks and bitcoin tend to rally. And if it's "risk off" they've both struggled. Well, yesterday bitcoin was down sharply early but it rebounded and closed positive for a positive outside reversal day.
If that upside momentum can continue in the coming days, I think that bodes well for the stock market.
The S&P 500 (C-fund) was flat yesterday keeping it within a very tight range since last week where it has been trading between the 50 and 200-day EMAs. It closed just below that 200-day EMA for a second straight day yesterday, and the high of the day was right on that average, so it did act as resistance. There's a lot of resistance near 4455 and and the 4375 area seems to trying to hold as the lower end of the range, but the next major support area may be closer to 4300 if we do see a breakdown.
DWCPF (S-fund / small caps) took a 1% hit yesterday and while it did make a lower low out of the recent short-term trading range, it did close within that red box. The open gaps are in blue and there is still one above and below the current level. It trades below all of the key moving averages so the bears still have control and the bulls have some work to do.
The EFA (I-fund) has been trending lower with some of that being because of the recent strength in the dollar. If we're looking for a silver lining here it is possible to consider the current trading channel to be part of the handle of a potential cup and handle formation, so a breakout to the upside may not be too much of a surprise, but because this too is trading below all of the major moving averages, the bears still have the ball here as well.
BND (Bonds / F-fund) was down again and the technical picture still looks poor here, except for maybe the possibility of a move back to the top of the descending channel at some point. But until that channel breaks to the upside, this looks like a do not touch fund.
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
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Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
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.
