Stocks were mixed early on Monday but the buyers stepped up and took most indices into positive territory by the close. The weaker dollar helped. The Dow gained 83-points. The Nasdaq and small caps were basically flat but came back from earlier losses. Yields were mixed with the 10-year Treasury down on the day, and the 30-year bond yield up slightly.
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There's talk of COVID cases potentially showing signs of peaking again in the U.S. and the U.K., and if that is the case, we could get another melt up type move in stocks - despite what the charts and indicators may be telling us. As some analysts predict, the market's valuation is already at a point where the next 10 - 12 years should, based on historical models, be well below normal returns. But that doesn't mean we won't get the occasional rally that seems overdone, unreasonable, and... fill in the blank. We've seen it. It happens, but timing it isn't never easy.
We're heading into the weakest two month period of the year for stocks historically, and while the year may end up with some solid gains, perhaps we're due for another shakeout during August and September. That is unless it is confirmed that COVID cases are retreating again. As much as they are pushing vaccinating and masks, it should be coming down, but if it bleeds it leads, and the media probably won't make it so easy to find out that things are getting better. The stock market may be the better barometer.
The dollar pulled back below that wedge / channel again but the 200-day EMA may provide support to keep the bullish trend going. If not, the I-fund may be back in play. It has been lagging badly since the rally in the dollar started in June.
As I mentioned, the yield on the 10-year was down so it may be trying to back off again from that 200-day average, and again, that doesn't make a whole lot of sense if we're supposed to be in a strong economic growth environment.
Internally there were mixed signals. We had some decent breadth in the NYSE but the Nasdaq was fairly negative. Volume-wise, the Nasdaq actually did better so it was those large tech stocks doing most of the work again. And with the Nasdaq making a new all time high, there were more 52-week lows made yesterday than new highs. This isn't normal.
Just a quick update today since this week is big and anything can happen with the two day FOMC meeting, which starts today. We also get earnings from Apple, Microsoft, Google, and a whole lot more after the bell today, and companies like Amazon and Facebook reporting later in the week. Not many money managers like to sell in front of a Fed meeting, or major earnings releases, but it isn't uncommon to see a sell the news / profit taking reaction afterward.
The S&P 500 (C-fund) remained pinned to the upper resistance lines, which are rising. The only thing wrong here is that it is at the top of a trading channel. We mentioned that earlier this month and we did get a pullback to the bottom of the channel, but if you blinked you missed it. Internally, that's another story as the broader market is showing signs of fatigue.
The DWCPF (S-fund) was basically flat yesterday after early losses and afternoon gains were both reversed. That set up a spinning top candlestick formation which is a sign of indecision and can be a turning point. I marked other spinning tops on the charts with arrows.
The EFA / I-fund was up with the help of a decline in the dollar. It has closed back above the 50-day EMA for two straight days, which is good news, but 3 to 5 closes would be better, and yesterday it got above the top of that descending channel. If the dollar breaks down, that could end the downtrend.
The Dow Transportation Index was up slightly as it moves closer to the 50-day EMA, which acted as resistance earlier this month.
The BND (bonds / F-fund) was down slightly but remains above the old resistance line from the rising channel. This could be a small bear flag forming off that negative reversal day last week. 87 could be a meaningful high, but with yields still struggling, I'm not so sure.
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"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[TD="width: 6%"]
[/TD]
[TD="width: 338, align: center"]
[/TR]
[/TABLE]
There's talk of COVID cases potentially showing signs of peaking again in the U.S. and the U.K., and if that is the case, we could get another melt up type move in stocks - despite what the charts and indicators may be telling us. As some analysts predict, the market's valuation is already at a point where the next 10 - 12 years should, based on historical models, be well below normal returns. But that doesn't mean we won't get the occasional rally that seems overdone, unreasonable, and... fill in the blank. We've seen it. It happens, but timing it isn't never easy.
We're heading into the weakest two month period of the year for stocks historically, and while the year may end up with some solid gains, perhaps we're due for another shakeout during August and September. That is unless it is confirmed that COVID cases are retreating again. As much as they are pushing vaccinating and masks, it should be coming down, but if it bleeds it leads, and the media probably won't make it so easy to find out that things are getting better. The stock market may be the better barometer.
The dollar pulled back below that wedge / channel again but the 200-day EMA may provide support to keep the bullish trend going. If not, the I-fund may be back in play. It has been lagging badly since the rally in the dollar started in June.
As I mentioned, the yield on the 10-year was down so it may be trying to back off again from that 200-day average, and again, that doesn't make a whole lot of sense if we're supposed to be in a strong economic growth environment.
Internally there were mixed signals. We had some decent breadth in the NYSE but the Nasdaq was fairly negative. Volume-wise, the Nasdaq actually did better so it was those large tech stocks doing most of the work again. And with the Nasdaq making a new all time high, there were more 52-week lows made yesterday than new highs. This isn't normal.
Just a quick update today since this week is big and anything can happen with the two day FOMC meeting, which starts today. We also get earnings from Apple, Microsoft, Google, and a whole lot more after the bell today, and companies like Amazon and Facebook reporting later in the week. Not many money managers like to sell in front of a Fed meeting, or major earnings releases, but it isn't uncommon to see a sell the news / profit taking reaction afterward.
The S&P 500 (C-fund) remained pinned to the upper resistance lines, which are rising. The only thing wrong here is that it is at the top of a trading channel. We mentioned that earlier this month and we did get a pullback to the bottom of the channel, but if you blinked you missed it. Internally, that's another story as the broader market is showing signs of fatigue.
The DWCPF (S-fund) was basically flat yesterday after early losses and afternoon gains were both reversed. That set up a spinning top candlestick formation which is a sign of indecision and can be a turning point. I marked other spinning tops on the charts with arrows.
The EFA / I-fund was up with the help of a decline in the dollar. It has closed back above the 50-day EMA for two straight days, which is good news, but 3 to 5 closes would be better, and yesterday it got above the top of that descending channel. If the dollar breaks down, that could end the downtrend.
The Dow Transportation Index was up slightly as it moves closer to the 50-day EMA, which acted as resistance earlier this month.
The BND (bonds / F-fund) was down slightly but remains above the old resistance line from the rising channel. This could be a small bear flag forming off that negative reversal day last week. 87 could be a meaningful high, but with yields still struggling, I'm not so sure.
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.
