It was an interesting day on Wall Street yesterday as the Dow gained 215-points while most of the other indices closed flat to negative, yet internally share volume on the NYSE was quite positive. The Nasdaq took a beating both in the index and internally. Small caps lagged and the I-fund did well despite another gain in the dollar. Bond yields rallies again taking the F-fund down early, but bonds battled back late to close near even.
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The S&P 500 / C-fund chart is testing the resistance line of the trading channel, but the channel is rising, so the resistance is also rising. There's an open gap near 4700 that is a potential target, but it's not very significant in size. This sideways action is at least taking it off the extreme overbought levels it had gotten to after Christmas, but the flat top we talked about above is a red flag for now.
DWCPF (small caps / S-fund) has a nice bull flag on it, but it is under some stubborn resistance right now. There's also an open gap near 2100 that will keep us looking back over our shoulders even if it breaks out to the upside of that flag without filling it first.
The EFA (I-fund) had a good day with no help from the dollar. It's at the top of that large red channel and there's a possible rising wedge pattern (blue) that, if broke on the down side, could cause it to come down to test the lower end of the channel - or at least the 50-day EMA.
BND (Bonds / F-fund) recovered from another rough morning to close with just a small loss. It found support at the prior lows, which is typical, but with the longer term trend being down, it wouldn't be a surprise to see that revisited again. There is an overhead open gap that could get filled on a relief rally in the short term.
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.
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The yield on the 10-Year Treasury gapped up for a second straight day, testing the October and November highs. Double tops tend to pull back but triple tops are more likely to breakout than fail. We'll see. The question is, what happens to stocks if it does breakout? Small caps and the Nasdaq lagged yesterday so we may have gotten a taste.
Breadth was basically flat on the NYSE issues, although the volume was quite positive. The Nasdaq was another story. Issue and volume breadth was negative. Also, there were 146 new 52-week lows for the Nasdaq yesterday, which isn't as bad as we saw at the end of 2021, but on a day when the S&P 500 made a new all time intraday high, it's kind of a red flag.
We can find some good and bad on the Nasdaq chart. It is lagging the S&P 500 in that it has not made a new high in about six weeks. It did get some support at the lows when it hit the 50-day EMA yesterday, which is a good sign, and something it did repeatedly over the summer, but we've seen this fall below that average more often in recent weeks. I do see a potential inverted head and shoulders pattern, which is generally a bullish chart formation.
I have the normal S&P 500 (C-fund) and DWCPF (S-fund) charts down below but these two are zoomed in to show specific actions that may come into play in the coming days.
We saw two flat top breakdowns after false breakouts on the S&P 500 recently, and yesterday may have repeated that pattern.
The DWCPF looks to be in a good looking bull flag, but it remains buried under those three moving averages, which have held as resistance for over a week now. On the bullish side, the 200-day EMA held as support during yesterday's selling. I think this one has to be played cautiously until it can prove that it can close above the 2225 area - preferably for more than a couple of days.
The December Jobs report comes out on Friday morning and estimates are looking for about 440,000 new jobs being added, which would be more than double the November number, and an unemployment rate of 4.1%, which would be one tick lower than the prior month's.
Admin Note: The 2022 version of the Guess the Dow Contest is posted in the forum and you'll have until next Sunday to make your guess.
Breadth was basically flat on the NYSE issues, although the volume was quite positive. The Nasdaq was another story. Issue and volume breadth was negative. Also, there were 146 new 52-week lows for the Nasdaq yesterday, which isn't as bad as we saw at the end of 2021, but on a day when the S&P 500 made a new all time intraday high, it's kind of a red flag.
We can find some good and bad on the Nasdaq chart. It is lagging the S&P 500 in that it has not made a new high in about six weeks. It did get some support at the lows when it hit the 50-day EMA yesterday, which is a good sign, and something it did repeatedly over the summer, but we've seen this fall below that average more often in recent weeks. I do see a potential inverted head and shoulders pattern, which is generally a bullish chart formation.
I have the normal S&P 500 (C-fund) and DWCPF (S-fund) charts down below but these two are zoomed in to show specific actions that may come into play in the coming days.
We saw two flat top breakdowns after false breakouts on the S&P 500 recently, and yesterday may have repeated that pattern.
The DWCPF looks to be in a good looking bull flag, but it remains buried under those three moving averages, which have held as resistance for over a week now. On the bullish side, the 200-day EMA held as support during yesterday's selling. I think this one has to be played cautiously until it can prove that it can close above the 2225 area - preferably for more than a couple of days.
The December Jobs report comes out on Friday morning and estimates are looking for about 440,000 new jobs being added, which would be more than double the November number, and an unemployment rate of 4.1%, which would be one tick lower than the prior month's.
Admin Note: The 2022 version of the Guess the Dow Contest is posted in the forum and you'll have until next Sunday to make your guess.
The S&P 500 / C-fund chart is testing the resistance line of the trading channel, but the channel is rising, so the resistance is also rising. There's an open gap near 4700 that is a potential target, but it's not very significant in size. This sideways action is at least taking it off the extreme overbought levels it had gotten to after Christmas, but the flat top we talked about above is a red flag for now.
DWCPF (small caps / S-fund) has a nice bull flag on it, but it is under some stubborn resistance right now. There's also an open gap near 2100 that will keep us looking back over our shoulders even if it breaks out to the upside of that flag without filling it first.
The EFA (I-fund) had a good day with no help from the dollar. It's at the top of that large red channel and there's a possible rising wedge pattern (blue) that, if broke on the down side, could cause it to come down to test the lower end of the channel - or at least the 50-day EMA.
BND (Bonds / F-fund) recovered from another rough morning to close with just a small loss. It found support at the prior lows, which is typical, but with the longer term trend being down, it wouldn't be a surprise to see that revisited again. There is an overhead open gap that could get filled on a relief rally in the short term.
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.
