Stocks did it again, and also once again, the large recent winners continue to win, while the broader market is showing less enthusiasm. The Nasdaq was up a whopping 1.73% while the Russell 2000 was down sharply. The S&P 500 was up 1% while the Equal Weight S&P 500 was down modestly. The Dow gained 83-points, and bonds were down.
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[TD="align: center"] Daily TSP Funds Return
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I know I'm sounding like a broken record, but it is the story of the day. We saw a day with huge gains in the Nasdaq and S&P 500, yet here's the advance / decline numbers for the NYSE and Nasdaq with all being negative except the up/down volume on the Nasdaq. If you saw just this it would be tough to guess that stocks were up big on the day.
Bond 10-year Treasury yield was popping up early again on Wednesday in front of Jerome Powell's speech at the Jackson Hole symposium, but like Tuesday, they came down by the close. This time they did close above the descending resistance line, but that is still another negative reversal day for yields. Bond prices and the F-fund move counter to the direction of yields.
This is key because the Federal Reserve Chairman Jerome Powell will be speaking at the annual Jackson Hole symposium today, and inflation will be a big item of interest with the Fed pumping money into the system and the dollar already tanking. It could be a market mover - both stocks and bonds, depending on his take.
The investment world is obsessed with the "work from home" companies, and it could last longer than we expect. But when it ends, it could be a quick reversal.
The S&P 500 (C-fund) punched through its rising trading channel as the bulls seem to be shifting into another gear. The channel is fairly narrow however, and buying a break to the upside is generally not a wise move. It's probably a better selling opportunity, but program trading and momentum seem to keep things going in one direction a lot longer than anyone expects.
Yet another negative divergence with the S&P 500, which is weighted heavily in favor of the larger tech companies, vs. the Equal Weight S&P 500 ETF called RSP, which are the same 500 stocks, but all 500 are weighted equally. Look how each have done over the last 2.5 months, since the June highs. Does this mean anything? Usually, and generally not in a positive way. But we've seen these divergences last a lot longer than we'd expect.
The DWCPF (S-fund) made another higher high yesterday and, as you'll see in the year to date chart below, it is flirting again with the 2020 highs.
The EFA (I-fund) made its highest post COVID crash close yesterday, and it looks to be comfortably holding above some support. Just based on this chart, which tends to predict the news, I would guess that the Fed is going to say something today that will send the dollar lower and we'll get a breakout here. Whether that is a buying or selling opportunity is a different story, but this chart looks like it wants new highs.
BND (Bond ETF / F-fund) started the day down again and bounced back making it back to back positive reversal days, and it has been able to close above the 50-day EMA once again.
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 se 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][/TD]
[TD="align: center"]
[/TR]
[/TABLE]
I know I'm sounding like a broken record, but it is the story of the day. We saw a day with huge gains in the Nasdaq and S&P 500, yet here's the advance / decline numbers for the NYSE and Nasdaq with all being negative except the up/down volume on the Nasdaq. If you saw just this it would be tough to guess that stocks were up big on the day.
Bond 10-year Treasury yield was popping up early again on Wednesday in front of Jerome Powell's speech at the Jackson Hole symposium, but like Tuesday, they came down by the close. This time they did close above the descending resistance line, but that is still another negative reversal day for yields. Bond prices and the F-fund move counter to the direction of yields.
This is key because the Federal Reserve Chairman Jerome Powell will be speaking at the annual Jackson Hole symposium today, and inflation will be a big item of interest with the Fed pumping money into the system and the dollar already tanking. It could be a market mover - both stocks and bonds, depending on his take.
The investment world is obsessed with the "work from home" companies, and it could last longer than we expect. But when it ends, it could be a quick reversal.
The S&P 500 (C-fund) punched through its rising trading channel as the bulls seem to be shifting into another gear. The channel is fairly narrow however, and buying a break to the upside is generally not a wise move. It's probably a better selling opportunity, but program trading and momentum seem to keep things going in one direction a lot longer than anyone expects.
Yet another negative divergence with the S&P 500, which is weighted heavily in favor of the larger tech companies, vs. the Equal Weight S&P 500 ETF called RSP, which are the same 500 stocks, but all 500 are weighted equally. Look how each have done over the last 2.5 months, since the June highs. Does this mean anything? Usually, and generally not in a positive way. But we've seen these divergences last a lot longer than we'd expect.
The DWCPF (S-fund) made another higher high yesterday and, as you'll see in the year to date chart below, it is flirting again with the 2020 highs.
The EFA (I-fund) made its highest post COVID crash close yesterday, and it looks to be comfortably holding above some support. Just based on this chart, which tends to predict the news, I would guess that the Fed is going to say something today that will send the dollar lower and we'll get a breakout here. Whether that is a buying or selling opportunity is a different story, but this chart looks like it wants new highs.
BND (Bond ETF / F-fund) started the day down again and bounced back making it back to back positive reversal days, and it has been able to close above the 50-day EMA once again.
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 se 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.
