The story on Wednesday was similar to Tuesday's, with a few differences. Like Tuesday, the Dow was up (+90-points), the S&P500 was flat, and the Nasdaq and small caps lagged with moderate losses. The difference yesterday was that the dollar and bonds rallied, setting up some interesting situations in the charts.
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Once again the Dow led, very much influenced by Warren Buffett who announced that he was adding large positions in the Dow stocks Chevron (+3%) and Verizon (+5.2%.) Like Tuesday it was the rally in oil / energy and the financials that helped the Dow as well, as yields also moved higher. See Tuesday's Commentary for more on that if you missed it.
And again that rise in yields and increase in oil prices puts a little pressure on the growth stocks. It's not dramatic but you can see the difference between the Russell 2000 value index (-0.58%) vs. the Russell 2000 growth (-0.91%), which had fallen all the way down to its 20-day EMA in early trading yesterday. Yields fell off their highs of the day in the second half of trading and that helped the growth ETF bounce off that 20-EMA.
Does yesterday reversal mean the pullback in growth is over? Possibly. The bears need to follow-through on selling or the dip buyers will just take charge again. If not, this may be the theme for a while until the market finds the next shiny object to focus on.
The retail sales report before the opening bell yesterday was a blowout, yet stocks were sluggish at best yesterday, although the RLX retail index did very well gaining 1.2% on the day. Wal-mart reports earnings before the bell today and that could have an influence on today's trading. Wal-mart's stock was up 1.06% yesterday.
Today the CEOs of Robinhood and Reditt head to the Capitol to be grilled on the recent Gamestop fiasco. I suppose it could have some impact on the market so if you see any strange spikes up or down today in stocks, it could be a question / answer / headline out of the hearings that gets trader's or hedge funds' attention.
The S&P 500 (C-fund) dropped sharply in early trading on Tuesday but rallied back in the second half of the day to close basically flat for a second day in a row. We did see a false breakout above the rising trading channel on Tuesday, which turned into a negative reversal day, so early losses are typical the day after. So now we're heading into a day following a positive reversal day in the S&P 500, so we could see some buying early today, but watch to see if the bears are ready to sell those rallies again. A move down to the bottom of the channel and the 50-day EMA would not be a bearish thing overall, but it would certainly be a better opportunity to put any cash you may have back in the market. The question is whether the market gives us that kind of opportunity.
The DWCPF (small caps / S-fund) lagged yesterday for a second straight day, and as we talked about, growth is under some pressure with bond yields and oil prices rising. Yesterday's low may have found some support at the bottom of that red channel, but the blue support line did break.
The EFA (I-fund) gave back some of Tuesday's big gains and huge swings in the dollar are part of the reason.
The dollar popped higher yesterday, jumping above the 50-day EMA, but it closed near its lows of the day and right on the 50-day average. That could be a right shoulder in a bearish head and shoulders pattern forming.
The Dow Transportation Index was also down sharply early, bounced back, but still closed with a loss of 0.62%. That 12,900 area looks like it could be key support, and 13,200 is the overhead resistance.
The BND (bonds / F-fund) bounced back after the steep 3-day sell-off, but the 200-day EMA got in the way on this first push higher. Those overhead open gaps could be short-term rebound targets.
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.
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Once again the Dow led, very much influenced by Warren Buffett who announced that he was adding large positions in the Dow stocks Chevron (+3%) and Verizon (+5.2%.) Like Tuesday it was the rally in oil / energy and the financials that helped the Dow as well, as yields also moved higher. See Tuesday's Commentary for more on that if you missed it.
And again that rise in yields and increase in oil prices puts a little pressure on the growth stocks. It's not dramatic but you can see the difference between the Russell 2000 value index (-0.58%) vs. the Russell 2000 growth (-0.91%), which had fallen all the way down to its 20-day EMA in early trading yesterday. Yields fell off their highs of the day in the second half of trading and that helped the growth ETF bounce off that 20-EMA.
Does yesterday reversal mean the pullback in growth is over? Possibly. The bears need to follow-through on selling or the dip buyers will just take charge again. If not, this may be the theme for a while until the market finds the next shiny object to focus on.
The retail sales report before the opening bell yesterday was a blowout, yet stocks were sluggish at best yesterday, although the RLX retail index did very well gaining 1.2% on the day. Wal-mart reports earnings before the bell today and that could have an influence on today's trading. Wal-mart's stock was up 1.06% yesterday.
Today the CEOs of Robinhood and Reditt head to the Capitol to be grilled on the recent Gamestop fiasco. I suppose it could have some impact on the market so if you see any strange spikes up or down today in stocks, it could be a question / answer / headline out of the hearings that gets trader's or hedge funds' attention.
The S&P 500 (C-fund) dropped sharply in early trading on Tuesday but rallied back in the second half of the day to close basically flat for a second day in a row. We did see a false breakout above the rising trading channel on Tuesday, which turned into a negative reversal day, so early losses are typical the day after. So now we're heading into a day following a positive reversal day in the S&P 500, so we could see some buying early today, but watch to see if the bears are ready to sell those rallies again. A move down to the bottom of the channel and the 50-day EMA would not be a bearish thing overall, but it would certainly be a better opportunity to put any cash you may have back in the market. The question is whether the market gives us that kind of opportunity.
The DWCPF (small caps / S-fund) lagged yesterday for a second straight day, and as we talked about, growth is under some pressure with bond yields and oil prices rising. Yesterday's low may have found some support at the bottom of that red channel, but the blue support line did break.
The EFA (I-fund) gave back some of Tuesday's big gains and huge swings in the dollar are part of the reason.
The dollar popped higher yesterday, jumping above the 50-day EMA, but it closed near its lows of the day and right on the 50-day average. That could be a right shoulder in a bearish head and shoulders pattern forming.
The Dow Transportation Index was also down sharply early, bounced back, but still closed with a loss of 0.62%. That 12,900 area looks like it could be key support, and 13,200 is the overhead resistance.
The BND (bonds / F-fund) bounced back after the steep 3-day sell-off, but the 200-day EMA got in the way on this first push higher. Those overhead open gaps could be short-term rebound targets.
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.
