Stocks opened slightly on the positive side yesterday, with some relative strength in the small caps, but by mid-morning things flipped over and we saw a pullback that lasted into the close. Small caps did outperform but they couldn't quite hold onto the larger early gains. The price of oil fell sharply, but it was more of a supply reaction than demand. Bonds rallied as yields pulled back from resistance.
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[TD="width: 311, align: center"] Daily TSP Funds Return
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Because of the federal holiday, the TSP fund prices and returns above constitute the market action of both Monday and Tuesday combined.
As we get into earnings season with fewer big economic reports on the calendar, we could see mini-swings as a new wave of Q3 earnings are released. Many earnings reports are not the market movers that big tech companies are, so while we're waiting for those, the election, and the next Fed meeting in early November, it could get a little choppy.
Despite the recent positive momentum in stocks, there are also potential profit takers when stocks are making new highs, and the seasonality calendar tells us it may be time to take a little off the table, but this is a bullish market and dips can probably be bought until the charts tell us otherwise.
Yields pulled back after the 10-year Treasury Yield failed to hold above its 200-day EMA, and the move up toward 4.1% did fill an open gap, which may have satisfied the rally. Now the open gaps are all below so perhaps the F-fund can rebound after its recent decline. Bond prices and the F-fund go up when yields fall.
Both yields and the price of oil often move in tandem since they are both sensitive to economic activity, and yesterday oil fell sharply after Israel said they don't plan to hit the Iranian oil fields, so it wasn't demand related, and it really only rallied because of that possibility. If that's the case, maybe the down trend resumes, which could be a concern for the economy if lower demand does become an issue.
The semiconductors took a big hit yesterday dragging the Nasdaq and big tech stocks in the S&P 500 down. This chart may be looking questionable as the large bearish looking flag failed badly at the top of the flag yesterday. It's holding at the 50-day EMA right now, but that moving average hasn't been much of a factor on this chart in recent months. That may tell us that we could see a move back to the bottom of the flag near 4800. If that's the case, large cap indices could struggle, but maybe that will open the door to small caps - if the economy stays firm and interest rates come down?
The market leading Dow Transportation Index was down yesterday but it was worse than the 0.62% loss indicated. It was a negative reversal day - right at the previous highs. I guess I shouldn't be surprised that it failed up here again, but charts rarely knock on the door to resistance this often without an eventual breakout. But look how long this resistance has held...
When this does breakout it could be a massive move, but in the short-term, if that resistance holds, it could retreat another 1000 points before making another attempt. I somehow doubt that, but it has fooled me for a long time now. Perhaps after the election the pressure cooker will finally explode to the upside, which would of course be a green light for the rest of the stock market, but until then...
Admin Note: In the coming weeks we may be working on a server and software upgrade, starting with the forum, that could disrupt the website periodically. I've procrastinated long enough and it's time to get it done. The maintenance could take part or all of the website down at times, but it will not impact Premium Service email and text alerts. I'll keep you posted.
The S&P 500 (C-fund) is back in that rising wedge formation after what might be considered a failed breakout, although its hard to say this is a failure with a straight face as it was actually the second highest closing price ever. But it moved back into the wedge, a formation that tends to break down, so perhaps we have a little short term warning signs.
DWCPF (S-fund) also made new 2024 intraday highs before it flipped over and create the negative reversal day. There is still support just below near the 2185 area. This is a solid looking chart and if that 2170 - 2185 strong support area can hold, there's probably another leg higher in store. Otherwise the lower support near 2075 would be a worst case scenario.
The I-fund: The EFA was down 1.70% yesterday, ACWX was down 1.74%, and the "ex USA ex China ex Hong Kong Index" was down 0.08%. This guessing game may go on through the end of the year as the TSP transitions into the new tracking index, which is supposed to eventually mimic the "ex USA ex China ex Hong Kong Index." You can see the TSP's eventual final daily price and return posted on our site each evening.
BND (Bonds / F-fund) rallied after the 10-year yield stalled at the 200-day EMA. It found support at that 75-day average but there could be some resistance from the current level up to 74.30. The top of the open gap is also a possible upside target.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
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.
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"]
[/TD]
[TD]
[/TD]
[TD="width: 311, align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
Because of the federal holiday, the TSP fund prices and returns above constitute the market action of both Monday and Tuesday combined.
As we get into earnings season with fewer big economic reports on the calendar, we could see mini-swings as a new wave of Q3 earnings are released. Many earnings reports are not the market movers that big tech companies are, so while we're waiting for those, the election, and the next Fed meeting in early November, it could get a little choppy.
Despite the recent positive momentum in stocks, there are also potential profit takers when stocks are making new highs, and the seasonality calendar tells us it may be time to take a little off the table, but this is a bullish market and dips can probably be bought until the charts tell us otherwise.
Yields pulled back after the 10-year Treasury Yield failed to hold above its 200-day EMA, and the move up toward 4.1% did fill an open gap, which may have satisfied the rally. Now the open gaps are all below so perhaps the F-fund can rebound after its recent decline. Bond prices and the F-fund go up when yields fall.
Both yields and the price of oil often move in tandem since they are both sensitive to economic activity, and yesterday oil fell sharply after Israel said they don't plan to hit the Iranian oil fields, so it wasn't demand related, and it really only rallied because of that possibility. If that's the case, maybe the down trend resumes, which could be a concern for the economy if lower demand does become an issue.
The semiconductors took a big hit yesterday dragging the Nasdaq and big tech stocks in the S&P 500 down. This chart may be looking questionable as the large bearish looking flag failed badly at the top of the flag yesterday. It's holding at the 50-day EMA right now, but that moving average hasn't been much of a factor on this chart in recent months. That may tell us that we could see a move back to the bottom of the flag near 4800. If that's the case, large cap indices could struggle, but maybe that will open the door to small caps - if the economy stays firm and interest rates come down?
The market leading Dow Transportation Index was down yesterday but it was worse than the 0.62% loss indicated. It was a negative reversal day - right at the previous highs. I guess I shouldn't be surprised that it failed up here again, but charts rarely knock on the door to resistance this often without an eventual breakout. But look how long this resistance has held...
When this does breakout it could be a massive move, but in the short-term, if that resistance holds, it could retreat another 1000 points before making another attempt. I somehow doubt that, but it has fooled me for a long time now. Perhaps after the election the pressure cooker will finally explode to the upside, which would of course be a green light for the rest of the stock market, but until then...
Admin Note: In the coming weeks we may be working on a server and software upgrade, starting with the forum, that could disrupt the website periodically. I've procrastinated long enough and it's time to get it done. The maintenance could take part or all of the website down at times, but it will not impact Premium Service email and text alerts. I'll keep you posted.
The S&P 500 (C-fund) is back in that rising wedge formation after what might be considered a failed breakout, although its hard to say this is a failure with a straight face as it was actually the second highest closing price ever. But it moved back into the wedge, a formation that tends to break down, so perhaps we have a little short term warning signs.
DWCPF (S-fund) also made new 2024 intraday highs before it flipped over and create the negative reversal day. There is still support just below near the 2185 area. This is a solid looking chart and if that 2170 - 2185 strong support area can hold, there's probably another leg higher in store. Otherwise the lower support near 2075 would be a worst case scenario.
The I-fund: The EFA was down 1.70% yesterday, ACWX was down 1.74%, and the "ex USA ex China ex Hong Kong Index" was down 0.08%. This guessing game may go on through the end of the year as the TSP transitions into the new tracking index, which is supposed to eventually mimic the "ex USA ex China ex Hong Kong Index." You can see the TSP's eventual final daily price and return posted on our site each evening.
BND (Bonds / F-fund) rallied after the 10-year yield stalled at the 200-day EMA. It found support at that 75-day average but there could be some resistance from the current level up to 74.30. The top of the open gap is also a possible upside target.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
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.
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.
