The rotation trade that everyone is talking about was in full force yesterday. The Dow shot up another 464-points to a new all time high - same for the Dow Transports, and the small caps and S&P 500 broke above important resistance. Yet the rally that was helped by those amazing FAANG stocks over the last few years, is now doing so without those high tech names. The Nasdaq was down yesterday and is still 7% off its recent highs.
[TABLE="align: center"]
[TR]
[TD="align: center"] Daily TSP Funds Return
[TABLE="align: center"]
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[TD]
[/TD]
[TD="width: 362, align: center"]
[/TD]
[/TR]
[/TABLE]
Bonds were up, yields were down, the dollar slipped, and oil was up slightly. All good things to help a rally that was stalled by a quick rise in bond yields.
As you'll see in the chart section down below, we saw some improvement in the technical picture as resistance was broken in some cases. Unless the market is throwing us another curve, it looks like the major indices do want to make new highs as the Dow and Transports have already done, and I'm taking about the ones that mean most to us TSPers - The C and S-funds, and probably even the I-fund.
The start to March was not exactly inline with the seasonality chart. Yeah, we got big rally on March 1st as the chart suggested, but after that we got three major declines in a row before things reversed back up. But one thing that did work in both January and February was the theme of a strong first half of the month, and weaker second half, and as we head into one of the more bullish weeks for March next week, we have to wonder if we're getting set up for a third straight month of second half of give backs?
Chart provided courtesy of www.sentimentrader.com
Seasonality is not a primary indicator, and sometimes it works better than others. We know this economy is growing after the COVID mess and more stimulus is on the way, and that is likely more important. However, the market has had a long time to react to this inevitable spending bill. While we could see some of that money end up in personal trading accounts to buy stocks for those who really don't need the money, there is always the possibility of a sell the news reaction if we do see stocks rally for the next week in anticipation of that imminent windfall for many consumers.
The S&P 500 (C-fund) popped back over some key resistance yesterday and seems to be on its way to testing the prior highs, but if want to get picky we could say that it is below the top resistance line of the rising trading channel. It has been a big run since last Thursday's lows - almost 200-points, so I would be surprised if the angle of incline eases a bit, even if it does hit new highs in the coming week or so. The bad news is, if that is a legit channel, coming back to test the lower end again is not out of the question.
The DWCPF (small caps / S-fund) gained another 1% yesterday, although we did see it close well off its intraday high, which was another 1% higher. It hurdled two levels of resistance, but some possible overhead resistance still exists coming off the recent highs. It pushed above the 20-day EMA which is a plus. This too has rallied nearly 10% off last week's lows, so...
The EFA (I-fund) rallied with the dollar dipping again. Technically it looks good here with few obstacles in its way - at least to the 76.50 area.
The Volatility Index fell sharply down to 22.4, which broke below that rising support line, but it held at the March 3rd low.
The rising support line on the 10-year yield broke for a day, which may be a good sign for stocks and bonds. The BND (bonds / F-fund) rallied off the lows for a second day as the relief seems to be here. The initial jobless claims report comes out before the bell today and that could have an impact on yields, and we know what moving yields can do to bonds and the stock market.
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.
[TABLE="align: center"]
[TR]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[TD]
[/TD]
[TD="width: 362, align: center"]
[/TR]
[/TABLE]
Bonds were up, yields were down, the dollar slipped, and oil was up slightly. All good things to help a rally that was stalled by a quick rise in bond yields.
As you'll see in the chart section down below, we saw some improvement in the technical picture as resistance was broken in some cases. Unless the market is throwing us another curve, it looks like the major indices do want to make new highs as the Dow and Transports have already done, and I'm taking about the ones that mean most to us TSPers - The C and S-funds, and probably even the I-fund.
The start to March was not exactly inline with the seasonality chart. Yeah, we got big rally on March 1st as the chart suggested, but after that we got three major declines in a row before things reversed back up. But one thing that did work in both January and February was the theme of a strong first half of the month, and weaker second half, and as we head into one of the more bullish weeks for March next week, we have to wonder if we're getting set up for a third straight month of second half of give backs?
Chart provided courtesy of www.sentimentrader.com
Seasonality is not a primary indicator, and sometimes it works better than others. We know this economy is growing after the COVID mess and more stimulus is on the way, and that is likely more important. However, the market has had a long time to react to this inevitable spending bill. While we could see some of that money end up in personal trading accounts to buy stocks for those who really don't need the money, there is always the possibility of a sell the news reaction if we do see stocks rally for the next week in anticipation of that imminent windfall for many consumers.
The S&P 500 (C-fund) popped back over some key resistance yesterday and seems to be on its way to testing the prior highs, but if want to get picky we could say that it is below the top resistance line of the rising trading channel. It has been a big run since last Thursday's lows - almost 200-points, so I would be surprised if the angle of incline eases a bit, even if it does hit new highs in the coming week or so. The bad news is, if that is a legit channel, coming back to test the lower end again is not out of the question.
The DWCPF (small caps / S-fund) gained another 1% yesterday, although we did see it close well off its intraday high, which was another 1% higher. It hurdled two levels of resistance, but some possible overhead resistance still exists coming off the recent highs. It pushed above the 20-day EMA which is a plus. This too has rallied nearly 10% off last week's lows, so...
The EFA (I-fund) rallied with the dollar dipping again. Technically it looks good here with few obstacles in its way - at least to the 76.50 area.
The Volatility Index fell sharply down to 22.4, which broke below that rising support line, but it held at the March 3rd low.
The rising support line on the 10-year yield broke for a day, which may be a good sign for stocks and bonds. The BND (bonds / F-fund) rallied off the lows for a second day as the relief seems to be here. The initial jobless claims report comes out before the bell today and that could have an impact on yields, and we know what moving yields can do to bonds and the stock market.
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.
