Stocks wobbled a bit and the charts are showing some cracks after a moderate sell off on Wednesday. The Dow gave up 172-points and the losses were more severe in the broader indices, with small caps lagging and falling nearly 2%. So, they don't go up everyday. We knew that but are they about to start a pullback? Is this a peak, or will they run right back up and keep the rally going? All good questions and investors now seem about split on that question.
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I was tied up on Wednesday evening so I only had time to put together a quick commentary. Sorry about that, but it's probably better this way since I can assure you that almost nobody knows for sure what will happen next. Almost. The "people" behind the curtain may know.
First off, stocks opened lower and got pinned near the lows most of the day until the Fed's FOMC Meeting Minutes were released. Good news or bad, it usually doesn't matter, there will be a spike in trading volume and more volatility as traders take advantage of the news while Wall Street tries to interpret it.
From what I read, the Fed was fairly hawkish with their foot on the rate hike gas peddle until something changes, and not much has changed yet.
They said, “With inflation remaining well above the Committee’s objective, participants judged that moving to a restrictive stance of policy was required to meet the Committee’s legislative mandate to promote maximum employment and price stability,”
And, “It likely would be appropriate to maintain that level for some time to ensure that inflation was firmly on a path back to 2 percent.”
If something changes, they'll back off. That's what we knew, and that's what the minutes said.
As you can see in those small intraday charts above, we got a pop to the upside after the release, but it was later sold, although the indices did close above their morning lows.
The S&P 500 (C-fund) broke below a rising wedge-like pattern but it's one day off the peak of this recent rally so it's a little overzealous to call this bearish - yet. It could turn out to be the perfect time to sell a bear market rally top, or it could just be a minor pullback, which this market needs with many of the short-term indicators stretched into overbought territory. The 200-day average is has held as resistance so far, so that makes this pullback a little more interesting since it is a highly watched indicator that can be a self-fulfilling prophesy. The open gap near 4150 is a potential technical downside target but whether the bottom of that gap holds as support or not may determine the significance of any pullback from the recent highs.
The DWCPF (S-fund) got clobbered with a 1.77% loss yesterday but that only took it down near last Wednesday's levels. The key here is that 200-day EMA, which like the 200-day SMA on the S&P 500 chart, has held so far as resistance.
The 10-year Treasury Yield was up yesterday and like stocks, it wasn't necessarily the FOMC Meeting Minutes that moved it because it was up before the minutes were released as well.
BND (Bonds / F-fund) continue to form a bull flag but yesterday's selling and pushed it below the 50-day EMA, so I am a little less bullish on bonds today than I was yesterday, unless this can get back above 76.
Again, my apologies for the brief commentary. Sometimes life gets in the way.
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. I appreciate it. 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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I was tied up on Wednesday evening so I only had time to put together a quick commentary. Sorry about that, but it's probably better this way since I can assure you that almost nobody knows for sure what will happen next. Almost. The "people" behind the curtain may know.
First off, stocks opened lower and got pinned near the lows most of the day until the Fed's FOMC Meeting Minutes were released. Good news or bad, it usually doesn't matter, there will be a spike in trading volume and more volatility as traders take advantage of the news while Wall Street tries to interpret it.
From what I read, the Fed was fairly hawkish with their foot on the rate hike gas peddle until something changes, and not much has changed yet.
They said, “With inflation remaining well above the Committee’s objective, participants judged that moving to a restrictive stance of policy was required to meet the Committee’s legislative mandate to promote maximum employment and price stability,”
And, “It likely would be appropriate to maintain that level for some time to ensure that inflation was firmly on a path back to 2 percent.”
If something changes, they'll back off. That's what we knew, and that's what the minutes said.
As you can see in those small intraday charts above, we got a pop to the upside after the release, but it was later sold, although the indices did close above their morning lows.
The S&P 500 (C-fund) broke below a rising wedge-like pattern but it's one day off the peak of this recent rally so it's a little overzealous to call this bearish - yet. It could turn out to be the perfect time to sell a bear market rally top, or it could just be a minor pullback, which this market needs with many of the short-term indicators stretched into overbought territory. The 200-day average is has held as resistance so far, so that makes this pullback a little more interesting since it is a highly watched indicator that can be a self-fulfilling prophesy. The open gap near 4150 is a potential technical downside target but whether the bottom of that gap holds as support or not may determine the significance of any pullback from the recent highs.
The DWCPF (S-fund) got clobbered with a 1.77% loss yesterday but that only took it down near last Wednesday's levels. The key here is that 200-day EMA, which like the 200-day SMA on the S&P 500 chart, has held so far as resistance.
The 10-year Treasury Yield was up yesterday and like stocks, it wasn't necessarily the FOMC Meeting Minutes that moved it because it was up before the minutes were released as well.
BND (Bonds / F-fund) continue to form a bull flag but yesterday's selling and pushed it below the 50-day EMA, so I am a little less bullish on bonds today than I was yesterday, unless this can get back above 76.
Again, my apologies for the brief commentary. Sometimes life gets in the way.
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. I appreciate it. 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.
