Stocks floundered most of the day yesterday but there was some buying into the close to push many of the indices into positive territory. The Dow didn't quite make it back to even and lost 58-points on the day. Bonds and the dollar were flat and the S&P 500 acted in sympathy and closed basically flat. The I-fund did get a nice bounce off of support.
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Yesterday Fed Chair Powell continued his testimony in front of congress and said they have not made any decisions for their March 20-21 FOMC meeting yet, and will have to see the economic data first before making a decision. That makes this Friday's jobs report and next week's CPI and PPI reports that much more important.
The yield on the 10-year Treasury was flat on Wednesday and the recent action has created a small head and shoulders pattern. H&S patterns are interesting in that they are continuation patterns and are very effective as a bearish indicator when the chart has been trending lower. But the 10-year yield has been trending higher so the bearish tendency of the H&S pattern isn't as likely, but it could certainly happen. It's usually large head and shoulders pattern that form tops, but we'll see if this small one has any meaning. For the stock market's sake, the bulls would want this to break down below 3.9%.
Here are a couple of interesting charts that caught my attention to show you. This first one is the percentage of S&P 500 stocks that are currently above their 200-day EMA. Right now it is any area where pullbacks have often found support. However, if the 50 level is broken, it could mean that the bear market action is ready to resume.
This chart from sentimentrader.com shows us what a compilation of various sentiment indicators are telling us about the "Dumb Money." That's you and me if you didn't know
. This indicator shows that the dumb money's confidence in a rally has moved down from over 80% in late January, down to 57% more recently. If there is any pattern in this chart it may be telling us that a bounce off of this mid-50's area is possible, and for that to happen stocks would generally have to rally.
Chart provided courtesy of www.sentimentrader.com
Again, we will get the February jobs report before the opening bell tomorrow (Friday), and estimates are looking for just over 200,000 jobs being added. Anything meaningfully higher could be very troubling for the stock market. The unemployment rate is expected to be 3.4%.
The S&P 500 (C-fund) was up slightly yesterday but it remained below some key support levels. It may not be that meaningful, but the 200-day simple moving average (orange) held a few times over the last couple of weeks, and that may be what folks are watching right now. Unfortunately that is how it works. The lines / indicators on the charts are meaningless, unless other people are triggering off of them as well.
The DWCPF (S-fund) was flat closing in the middle of yesterday' trading range. It managed to crawl back above the 50 and 200-day EMAs in the last few minutes of trading after some earlier weakness. Spinning top candles, like we saw yesterday, could be a sign of indecision and a possible indication of a reversal coming. Unlike some of the other charts, this one is still above key support and in a very positive looking bull flag. Is this the leader or a smoke screen?
The EFA (I-fund) had a good day bouncing off its 50-day EMA again and remaining in its bullish looking flag. Like the small caps above, it is looks better than the S&P 500 for sure.
BND (bonds / F-fund) was down a bit and it continues to hug that neckline of support just below 71.50. It looks like a possible bearish flag formation but if I zoomed out we'd see the head and shoulders pattern that I have been noting, and expected a possible right shoulder to form, meaning some intermediate term rally for bonds. The jobs report would have to cooperate and not come it too hot.
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 so much 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.
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Yesterday Fed Chair Powell continued his testimony in front of congress and said they have not made any decisions for their March 20-21 FOMC meeting yet, and will have to see the economic data first before making a decision. That makes this Friday's jobs report and next week's CPI and PPI reports that much more important.
The yield on the 10-year Treasury was flat on Wednesday and the recent action has created a small head and shoulders pattern. H&S patterns are interesting in that they are continuation patterns and are very effective as a bearish indicator when the chart has been trending lower. But the 10-year yield has been trending higher so the bearish tendency of the H&S pattern isn't as likely, but it could certainly happen. It's usually large head and shoulders pattern that form tops, but we'll see if this small one has any meaning. For the stock market's sake, the bulls would want this to break down below 3.9%.
Here are a couple of interesting charts that caught my attention to show you. This first one is the percentage of S&P 500 stocks that are currently above their 200-day EMA. Right now it is any area where pullbacks have often found support. However, if the 50 level is broken, it could mean that the bear market action is ready to resume.
This chart from sentimentrader.com shows us what a compilation of various sentiment indicators are telling us about the "Dumb Money." That's you and me if you didn't know
Chart provided courtesy of www.sentimentrader.com
Again, we will get the February jobs report before the opening bell tomorrow (Friday), and estimates are looking for just over 200,000 jobs being added. Anything meaningfully higher could be very troubling for the stock market. The unemployment rate is expected to be 3.4%.
The S&P 500 (C-fund) was up slightly yesterday but it remained below some key support levels. It may not be that meaningful, but the 200-day simple moving average (orange) held a few times over the last couple of weeks, and that may be what folks are watching right now. Unfortunately that is how it works. The lines / indicators on the charts are meaningless, unless other people are triggering off of them as well.
The DWCPF (S-fund) was flat closing in the middle of yesterday' trading range. It managed to crawl back above the 50 and 200-day EMAs in the last few minutes of trading after some earlier weakness. Spinning top candles, like we saw yesterday, could be a sign of indecision and a possible indication of a reversal coming. Unlike some of the other charts, this one is still above key support and in a very positive looking bull flag. Is this the leader or a smoke screen?
The EFA (I-fund) had a good day bouncing off its 50-day EMA again and remaining in its bullish looking flag. Like the small caps above, it is looks better than the S&P 500 for sure.
BND (bonds / F-fund) was down a bit and it continues to hug that neckline of support just below 71.50. It looks like a possible bearish flag formation but if I zoomed out we'd see the head and shoulders pattern that I have been noting, and expected a possible right shoulder to form, meaning some intermediate term rally for bonds. The jobs report would have to cooperate and not come it too hot.
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 so much 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.
