After a couple of down days, stocks came roaring back on Thursday, very similar to last week when stocks sold off early in the week, and rebounded on Thursday and Friday. We did see a little selling near the close but the indices held onto most of their gains. The Dow may have backed off the most gaining 188-points which was about 140 off the highs of the day. Bonds rallied, yields were down, and the dollar tanked.
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The dollar chart looks awful, although that large head and shoulders pattern which is certainly bearish, can also bounce up to test the head and again before breaking down, but either way, test or no test, this is likely going to break down eventually. What does that mean? Probably a lot of trouble on the inflation front and then the Fed has to consider interest rate hikes, but maybe I'm getting ahead of things. A test of the head, which would push it up near the 200-day EMA again, could happen and that could change everything in the short-term, so that's what may tell the tale over the next several weeks.
The stock market indices have been coming off their highs for the last two to ten weeks, depending on the index, and whether those will be intermediate term tops or not is obviously the big question, and again what the dollar does may determine that.
The great rotation between the indices was no where to be found yesterday as tech, small caps, and large cap stocks all rallied. The Transports did not and that may be a problem as that chart just recently broke down as you'll see in the charts section below.
The S&P 500 (C-fund) may be putting in a short-term low after retesting and holding at the 50-day EMA this week. That one blue channel did break so that's a bit of a warning, especially since it ran back up to that channel and failed to start this week. This chart does look better than some of the others, but which of them is calling the shots for the general market?
The DWCPF (S-fund) tanked in early May, popped up but failed at the 50-day EMA this week before rolling over again. Then it reversed up on Wednesday despite the losses, and followed through on Thursday. That looks good except for all of the resistance overhead and what looks like a big bear flag.
The EFA / I-fund had a nice day and that decline in the dollar certainly helped. The price the TSP gave the I-fund seems to always need adjusting. This chart may look the best out of all the TSP funds. But if the dollar decides to test the head of its head and shoulders pattern as we talked about up top, that would likely change the character of this index / fund.
The Dow Transportation Index had been leading on the upside for weeks, if not months, but a new development yesterday saw it fall despite the positive reversal on Wednesday and most stocks being higher yesterday. Then it broke below the rising trading channel's support line. Strike one here, and a possible warning sign if this doesn't improve quickly.
The Nasdaq rallied sharply yesterday so the reversal off the lows on Wednesday up to the highs yesterday was a gain of more than 500-points. But, it ran into the 50-day EMA and stalled. That tends to happen on the first attempt back up so I should be more patient here, but that sure looks like it could be a nasty bear flag there. If that does break down, look for test of the March lows in the coming week. If it doesn't break down then of course it would be much more bullish..
BND (F-fund) had a strong rally yesterday but like the Nasdaq, it failed at the 50-day EMA and it is testing the top of a bear flag. It doesn't look good, but bonds have surprised me before.
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. Have a great weekend!
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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The dollar chart looks awful, although that large head and shoulders pattern which is certainly bearish, can also bounce up to test the head and again before breaking down, but either way, test or no test, this is likely going to break down eventually. What does that mean? Probably a lot of trouble on the inflation front and then the Fed has to consider interest rate hikes, but maybe I'm getting ahead of things. A test of the head, which would push it up near the 200-day EMA again, could happen and that could change everything in the short-term, so that's what may tell the tale over the next several weeks.
The stock market indices have been coming off their highs for the last two to ten weeks, depending on the index, and whether those will be intermediate term tops or not is obviously the big question, and again what the dollar does may determine that.
The great rotation between the indices was no where to be found yesterday as tech, small caps, and large cap stocks all rallied. The Transports did not and that may be a problem as that chart just recently broke down as you'll see in the charts section below.
The S&P 500 (C-fund) may be putting in a short-term low after retesting and holding at the 50-day EMA this week. That one blue channel did break so that's a bit of a warning, especially since it ran back up to that channel and failed to start this week. This chart does look better than some of the others, but which of them is calling the shots for the general market?
The DWCPF (S-fund) tanked in early May, popped up but failed at the 50-day EMA this week before rolling over again. Then it reversed up on Wednesday despite the losses, and followed through on Thursday. That looks good except for all of the resistance overhead and what looks like a big bear flag.
The EFA / I-fund had a nice day and that decline in the dollar certainly helped. The price the TSP gave the I-fund seems to always need adjusting. This chart may look the best out of all the TSP funds. But if the dollar decides to test the head of its head and shoulders pattern as we talked about up top, that would likely change the character of this index / fund.
The Dow Transportation Index had been leading on the upside for weeks, if not months, but a new development yesterday saw it fall despite the positive reversal on Wednesday and most stocks being higher yesterday. Then it broke below the rising trading channel's support line. Strike one here, and a possible warning sign if this doesn't improve quickly.
The Nasdaq rallied sharply yesterday so the reversal off the lows on Wednesday up to the highs yesterday was a gain of more than 500-points. But, it ran into the 50-day EMA and stalled. That tends to happen on the first attempt back up so I should be more patient here, but that sure looks like it could be a nasty bear flag there. If that does break down, look for test of the March lows in the coming week. If it doesn't break down then of course it would be much more bullish..
BND (F-fund) had a strong rally yesterday but like the Nasdaq, it failed at the 50-day EMA and it is testing the top of a bear flag. It doesn't look good, but bonds have surprised me before.
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. Have a great weekend!
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.
