The dip buyers showed up after a fairly negative morning on Monday, and they slowly but surely erased those early losses by the close. The Nasdaq was flat and the I-fund was held back by a big rally in the dollar, but other than that the bulls won Monday's battle. The initial weakness was likely caused by that tick down in the unemployment rate that was reported on Friday, and that pushed yields higher which could give the Fed another reason to be concerned about inflation and not pausing their rate hikes.
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It was a slow but telling day as the bulls, who may have been a little fatigued, were able to battle back again and push most of the indices into positive territory by the close. Small caps did particularly well despite the rally in yields. Bank stocks benefit from higher yields, and the recent weakness in the banking sector has been a burden on the S-fund, so yesterday's relief rally in the banks helped the small cap fund.
The 10-year Treasury Yield moved up above 3.4% again, but there is plenty of resistance overhead and the bearish looking flags are still in play so I don't make too much of the rally that was driven by a small move in the jobs data.
The rally in yields put the pressure on bond prices and the F-fund, as it was down sharply on the day after a gap down open.
The dollar rallied as well and that of course is an anchor for the I-fund, and likely why it lagged on Monday, but the I-fund also closed near its highs of the day.
Some rising support will be tested again today in the I-fund as the looming open gaps litter the chart.
The Dow Transportation Index is a strong indication of economic strength or weakness, and it has certainly been lagging the S&P 500 and Nasdaq this year. Bearish looking flags can be found underneath the descending resistance line off the highs.
Yesterday's strong close does set up the possibility of a gap up opening today, if the market can continue to climb that wall of worry that we're all talking about. It's been a tough market to negotiate the last couple of weeks with the various indices not always moving in the same direction.
We get the CPI report on Wednesday, the PPI on Thursday, and the March retail sales numbers on Friday, so just enough to keep the bond market jumpy. The bond market has been pricing in a good chance of a recession but we really haven't seen that yet in the stock market other than in the Transportation Index chart above.
The S&P 500 (C-fund) has been drifting sideways for the last three trading days after that negative reversal day last Tuesday. Here we are with another possible turnaround Tuesday. There is so much going on between 3975 and 4200 and I honestly don't know which it could hit first (or surpass) but there is rising support near 4160 where I would expect the bulls to keep the pressure on if the bears try pushing the index lower during the day.
The DWCPF (S-fund) gained nearly 1% on the day as bank stocks and oil services helped make this fund the leader on the day. There's overhead resistance, moving averages, and a bear flag to contend with on this chart so the bears still seem to be in control here for now, a opposed to the S&P 500 where the bulls have the ball. Yesterday's rally brings it back into the flag however, creating another fake out on the downside.
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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It was a slow but telling day as the bulls, who may have been a little fatigued, were able to battle back again and push most of the indices into positive territory by the close. Small caps did particularly well despite the rally in yields. Bank stocks benefit from higher yields, and the recent weakness in the banking sector has been a burden on the S-fund, so yesterday's relief rally in the banks helped the small cap fund.
The 10-year Treasury Yield moved up above 3.4% again, but there is plenty of resistance overhead and the bearish looking flags are still in play so I don't make too much of the rally that was driven by a small move in the jobs data.
The rally in yields put the pressure on bond prices and the F-fund, as it was down sharply on the day after a gap down open.
The dollar rallied as well and that of course is an anchor for the I-fund, and likely why it lagged on Monday, but the I-fund also closed near its highs of the day.
Some rising support will be tested again today in the I-fund as the looming open gaps litter the chart.
The Dow Transportation Index is a strong indication of economic strength or weakness, and it has certainly been lagging the S&P 500 and Nasdaq this year. Bearish looking flags can be found underneath the descending resistance line off the highs.
Yesterday's strong close does set up the possibility of a gap up opening today, if the market can continue to climb that wall of worry that we're all talking about. It's been a tough market to negotiate the last couple of weeks with the various indices not always moving in the same direction.
We get the CPI report on Wednesday, the PPI on Thursday, and the March retail sales numbers on Friday, so just enough to keep the bond market jumpy. The bond market has been pricing in a good chance of a recession but we really haven't seen that yet in the stock market other than in the Transportation Index chart above.
The S&P 500 (C-fund) has been drifting sideways for the last three trading days after that negative reversal day last Tuesday. Here we are with another possible turnaround Tuesday. There is so much going on between 3975 and 4200 and I honestly don't know which it could hit first (or surpass) but there is rising support near 4160 where I would expect the bulls to keep the pressure on if the bears try pushing the index lower during the day.
The DWCPF (S-fund) gained nearly 1% on the day as bank stocks and oil services helped make this fund the leader on the day. There's overhead resistance, moving averages, and a bear flag to contend with on this chart so the bears still seem to be in control here for now, a opposed to the S&P 500 where the bulls have the ball. Yesterday's rally brings it back into the flag however, creating another fake out on the downside.
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.
