The bears kept the pressure on Friday as the profit taking turned into something a little more serious late last week, and now some key support levels are being tested. The Dow gave up 306-points and the Nasdaq took a major hit with a loss over 2%. The question is whether this is a set up for a buy when Nvidia reports earnings after the bell on Wednesday, or if this is a reaction to the inflation data and the less dovish Fed and something Nvidia can't fix?
I have been expressing my opinion that the large open gap created after the election will not get filled this year, but I see the Nasdaq was dipping into its gap on Friday with that nasty 400+ point decline. That could mean the others are going to follow, if we don't start seeing a bounce real quick.
Here's the S&P 500 (C-fund) and we can see that the top of the gap held at the close on Friday, and there is some other support in the area that is the only thing keeping it from filling that gap, so the bulls will be put to the test as soon as that opening bell rings this morning. There is also an open gap above Friday's candlestick that could get filled this week.
Trading volume was on the high side as it was an expiration Friday, and sometimes that becomes the end of a move with the following week a reversal. That's what the bulls are hoping for. The last time we saw the volume this high - before the election - was the last day in October, which marked the prior closing low and a test of the lower end of the channel.
The 10-year Treasury Yield continued its upward trend inside that trading channel, but it did look a little heavy toward the end of the week as it closed closer to the lows of the day on Thursday and Friday, than near the highs. If this channel holds, it will be tough for the small caps to continue to lead the TSP funds.
The dollar's strength has been devastating to the I-fund over the last 6 weeks or so. I will talk more about the I-fund below.
I had mentioned a couple of times that the Fed may be adding more liquidity to the system and the recent breakout from the descending trend was looking encouraging. Liquidity and lower interest rates is a major catalyst for the stock market. But last week we saw a little pullback in this is liquidity chart and the question is whether this was just another lower high in the uptrend, or just a modest dip that is going to test the old resistance line.
The market leading Dow Transportation Index had a major breakout from a long term sideways consolidation, but now there is a lot of room below in the short-term if the bulls can't stop the bleeding. Again, I have been thinking the gaps won't get filled by the end of the year, but if this one does go for that gap, then it's a long way down to 16,500.
We have a couple of days left in the Mid-month lull in the November seasonality chart, but once we get past that, from the 21st of November until the end of the month has been one of the best stretches of the year for stocks.
Chart provided courtesy of www.sentimentrader.com
It is a quiet week for the economic data calendar, so this week's highlight will be Nvidia's earnings after the bell on Wednesday.
Keep an eye on Bitcoin, which has rallied dramatically this month, but has been flattening out in recent days. The rally was triggered because of Trump's bitcoin friendly policies, but the strength is also an indication of trader's and investor's appetite to take on risky assets, which is a good thing in a bull market.
The DWCPF (S-fund) is in a similar situation as the S&P 500 where it is sitting on the top of the large open gap. Gaps tend to get filled, although I thought this one could hold for a while, but that is being put to the test as we aren't exactly getting the gap and go response I thought we might. Still, there is a lot of support in the area.
I'm not sure what the TSP is doing with the I-fund, but it is not making a whole lot of sense, or at least it is not making it easy for us to track it during the day
The I-fund lost 0.57% on Friday. The new ACWX ETF is supposed to track what the new I-fund is doing. It is supposed be mimicking the "ex USA ex China ex Hong Kong Index" Index. That ETF was down just 0.17% on Friday.
The EFA that tracked the old I-fund and was down just 0.36% on Friday. What are we supposed to do with that info? Neither are accurate.
You can see the updated TSP prices and returns posted by about 9:15 PM ET daily here: https://www.tsptalk.com/tsp_share_prices.php
BND (bonds / F-fund) remains in a long downtrend but that 200-day EMA has been holding for over a week. It could take a dangerously higher move in Treasury Yields to have this break down. If the Fed keeps talking about fewer rate cuts, that may be the case.
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.
| Daily TSP Funds Return
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I have been expressing my opinion that the large open gap created after the election will not get filled this year, but I see the Nasdaq was dipping into its gap on Friday with that nasty 400+ point decline. That could mean the others are going to follow, if we don't start seeing a bounce real quick.
Here's the S&P 500 (C-fund) and we can see that the top of the gap held at the close on Friday, and there is some other support in the area that is the only thing keeping it from filling that gap, so the bulls will be put to the test as soon as that opening bell rings this morning. There is also an open gap above Friday's candlestick that could get filled this week.
Trading volume was on the high side as it was an expiration Friday, and sometimes that becomes the end of a move with the following week a reversal. That's what the bulls are hoping for. The last time we saw the volume this high - before the election - was the last day in October, which marked the prior closing low and a test of the lower end of the channel.
The 10-year Treasury Yield continued its upward trend inside that trading channel, but it did look a little heavy toward the end of the week as it closed closer to the lows of the day on Thursday and Friday, than near the highs. If this channel holds, it will be tough for the small caps to continue to lead the TSP funds.
The dollar's strength has been devastating to the I-fund over the last 6 weeks or so. I will talk more about the I-fund below.
I had mentioned a couple of times that the Fed may be adding more liquidity to the system and the recent breakout from the descending trend was looking encouraging. Liquidity and lower interest rates is a major catalyst for the stock market. But last week we saw a little pullback in this is liquidity chart and the question is whether this was just another lower high in the uptrend, or just a modest dip that is going to test the old resistance line.
The market leading Dow Transportation Index had a major breakout from a long term sideways consolidation, but now there is a lot of room below in the short-term if the bulls can't stop the bleeding. Again, I have been thinking the gaps won't get filled by the end of the year, but if this one does go for that gap, then it's a long way down to 16,500.
We have a couple of days left in the Mid-month lull in the November seasonality chart, but once we get past that, from the 21st of November until the end of the month has been one of the best stretches of the year for stocks.
Chart provided courtesy of www.sentimentrader.com
It is a quiet week for the economic data calendar, so this week's highlight will be Nvidia's earnings after the bell on Wednesday.
Keep an eye on Bitcoin, which has rallied dramatically this month, but has been flattening out in recent days. The rally was triggered because of Trump's bitcoin friendly policies, but the strength is also an indication of trader's and investor's appetite to take on risky assets, which is a good thing in a bull market.
The DWCPF (S-fund) is in a similar situation as the S&P 500 where it is sitting on the top of the large open gap. Gaps tend to get filled, although I thought this one could hold for a while, but that is being put to the test as we aren't exactly getting the gap and go response I thought we might. Still, there is a lot of support in the area.
I'm not sure what the TSP is doing with the I-fund, but it is not making a whole lot of sense, or at least it is not making it easy for us to track it during the day
The I-fund lost 0.57% on Friday. The new ACWX ETF is supposed to track what the new I-fund is doing. It is supposed be mimicking the "ex USA ex China ex Hong Kong Index" Index. That ETF was down just 0.17% on Friday.
The EFA that tracked the old I-fund and was down just 0.36% on Friday. What are we supposed to do with that info? Neither are accurate.
You can see the updated TSP prices and returns posted by about 9:15 PM ET daily here: https://www.tsptalk.com/tsp_share_prices.php
BND (bonds / F-fund) remains in a long downtrend but that 200-day EMA has been holding for over a week. It could take a dangerously higher move in Treasury Yields to have this break down. If the Fed keeps talking about fewer rate cuts, that may be the case.
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.
