The bad news was that stocks were down sharply again on Tuesday, so no Turnaround Tuesday this week. The good news is, and this may be grasping at straws, the indices stabilized and basically held their morning lows of the day and in the case of the S&P 500, closed about 16 points off the 10:45 AM lows. The Dow ended the day down another 308-points and at this point we have seen a 50% retracement of the gains off the June lows.
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What that is saying is that the rally from the June lows to the August high got back 50% of the January to June losses. Now, the recent pullback has taken back 50% of that 2-month gain. It may not mean anything but it isn't unusual to see turnarounds or a bounce at this juncture. "Isn't unusual" does not mean it will bounce from here, but there is a tendency. We're still in a bear market, based on my criteria, so I expect bearish results, but perhaps there's a little pre-holiday reversal bounce coming?
Yesterday the declining issues easily outpaced the advancing, and volume was just as lopsided. The new lows are stacking up.
The dollar and the yield on the 10-year Treasury were basically flat, although the dollar has been knocking on that 29.20 door for 7 days now.
With the dollar and yields flat, and the price of oil tanking $5.54 a barrel, I would have expected the stocks market to make some kind of attempt at a bounce, but other than a positive open, it seems the downside momentum in the major indices was too much to overcome.
Pre-holiday reversals don't just happen in the stock market indices, and it is possible that the sell off in oil yesterday was the start of its pre-holiday reversal.
We get the August jobs report on Friday and estimates are looking for a gain of 300,000 jobs and an unemployment rate of 3.5%.
Of course that comes out right before an important 3-day weekend so trading volume may be light and the indices could get pushed around and confuse us a bit, and as I've said, pre-holiday reversals become possible.
So the market could get even more tricky in the coming days because of the light volume, late summer, pre-holiday trading that we could see. September, the worst month of the year historically for stocks, will give us that jobs report, another CPI report, and then a FOMC meeting were investors are trying to decide how hawkish the Fed will be with their next interest rate hike. Good luck to all of us!
The S&P 500 (C-fund) fell another 1.1% yesterday and in the process that old gap from June got tested and filled again. There's some potential support at the bottom of that gap as it did close off that line slightly. There's more possible support near 3950, and then another old, already filled once, gap between about 3845 and 3900. There is an actual open gap all the way down near 3800, but we'll cross that bridge if we get there. The 50% retracement may bring in some buyers today. If not, uh, oh.
DWCPF (S-fund / small caps) lagged yesterday with a 1.24% loss as the broader indices like the NYSE took a slightly harder hit. It has now closed below the 50-day EMA for a second day, so from a technical confirmation point a view, this needs to bounce quickly or 1650 could be in the picture soon.
EFA (I-fund) held up slightly better than the U.S. stocks again, but that is an ugly looking negative outside reversal candlestick.
The BND (Bonds / F-fund) chart has quickly turned ugly after the late July rally, and this has been moving fairly closely in sync with stocks, and there are some signs that we could get a brief bounce here as we could see a right shoulder get formed, which could be good news for stocks and bonds in the very short-term. That's speculation of course, but a pre-holiday reversals would work into that theory very well.
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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What that is saying is that the rally from the June lows to the August high got back 50% of the January to June losses. Now, the recent pullback has taken back 50% of that 2-month gain. It may not mean anything but it isn't unusual to see turnarounds or a bounce at this juncture. "Isn't unusual" does not mean it will bounce from here, but there is a tendency. We're still in a bear market, based on my criteria, so I expect bearish results, but perhaps there's a little pre-holiday reversal bounce coming?
Yesterday the declining issues easily outpaced the advancing, and volume was just as lopsided. The new lows are stacking up.
The dollar and the yield on the 10-year Treasury were basically flat, although the dollar has been knocking on that 29.20 door for 7 days now.
With the dollar and yields flat, and the price of oil tanking $5.54 a barrel, I would have expected the stocks market to make some kind of attempt at a bounce, but other than a positive open, it seems the downside momentum in the major indices was too much to overcome.
Pre-holiday reversals don't just happen in the stock market indices, and it is possible that the sell off in oil yesterday was the start of its pre-holiday reversal.
We get the August jobs report on Friday and estimates are looking for a gain of 300,000 jobs and an unemployment rate of 3.5%.
Of course that comes out right before an important 3-day weekend so trading volume may be light and the indices could get pushed around and confuse us a bit, and as I've said, pre-holiday reversals become possible.
So the market could get even more tricky in the coming days because of the light volume, late summer, pre-holiday trading that we could see. September, the worst month of the year historically for stocks, will give us that jobs report, another CPI report, and then a FOMC meeting were investors are trying to decide how hawkish the Fed will be with their next interest rate hike. Good luck to all of us!
The S&P 500 (C-fund) fell another 1.1% yesterday and in the process that old gap from June got tested and filled again. There's some potential support at the bottom of that gap as it did close off that line slightly. There's more possible support near 3950, and then another old, already filled once, gap between about 3845 and 3900. There is an actual open gap all the way down near 3800, but we'll cross that bridge if we get there. The 50% retracement may bring in some buyers today. If not, uh, oh.
DWCPF (S-fund / small caps) lagged yesterday with a 1.24% loss as the broader indices like the NYSE took a slightly harder hit. It has now closed below the 50-day EMA for a second day, so from a technical confirmation point a view, this needs to bounce quickly or 1650 could be in the picture soon.
EFA (I-fund) held up slightly better than the U.S. stocks again, but that is an ugly looking negative outside reversal candlestick.
The BND (Bonds / F-fund) chart has quickly turned ugly after the late July rally, and this has been moving fairly closely in sync with stocks, and there are some signs that we could get a brief bounce here as we could see a right shoulder get formed, which could be good news for stocks and bonds in the very short-term. That's speculation of course, but a pre-holiday reversals would work into that theory very well.
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.
