The post-holiday results looked similar to the pre-holiday action with gains and new highs in the S&P 500 and Nasdaq. There were a couple of differences as small caps led and the I-fund fell. Before yesterday the C-fund was up about 2.0% in July, the I-fund was leading with a 2.4% gain, and the S-fund was actually down 0.46 for the month. While the 0.34% gain in the S-fund yesterday was quite modest, it led the other funds and many on Wall Street have been impatiently waiting for them to play catch up? The I-fund pulled back putting a dent in their big July gains, and bonds (F-fund) were flat.
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The market breadth was positive on Monday, but more so in the Nasdaq and we also saw a surprise reversal in the number of new highs / new lows on the Nasdaq. We had been been seeing an alarming number of new lows vs. few new highs, but yesterday the new highs led handily. It was just the first day back from a holiday weekend, but it was not bad. Everyone keeps waiting for some kind of rotation into the small and broader indices and it has been a long waiting game with plenty of disappointment for those not riding the large cap tech wave.
I have been posting this chart every once in a while this year as it depicts the average movement of the Dow during election years. We don't invest directly in the Dow but the TSP funds have been chopping around the last couple of months with the C-fund leading by quite a bit over the last two months. The seasonality chart bottomed in May and historically June and July have been good, but surprisingly August, one of the worst months of the year outside of election years, has an explosive record during election years. Who knows what happens this year but perhaps this chart triggers some extra dip buying in July?
Source: seasonax.com with analysis from tsptalk.com
I have been watching the Dow Transportation Index for some kind of confirmation that this market leader is not dead, but yesterday was a setback. This head and shoulders pattern failure at the head test is a disappointment for the bulls as it is one of the outcomes of a head and shoulders pattern, especially one created in a downtrend.
This is how they typically play out, hence the disappointment as it trades back below resistance after failing at the head test.
Fed chair Jerome Powell will give his semiannual testimony to the Senate Banking Committee today and the House Financial Services Committee on Wednesday. We will also get the June CPI report on Thursday.
The S&P 500 (C-fund) made more new highs yesterday with its modest 0.10% gain. The spinning top could indicate a pause in the rally for a few days, but the dip buyers never seem far away. With Jerome Powell speaking a couple of times this week, there could be some volatility after the 5-day rally.
The S-fund (DWCPF) led for one of the few times in recent weeks but the chart is still facing some resistance. It did manage to close above that purple moving average, which has been of some significance on this chart this year. It has only closed above that average three other times since late May and each one of those failed the following day.
The EFA (I-fund) was dealing with a rising dollar and the surprising results in the French election. It had also hit a little resistance so I'm more interested to see how it deals with a pullback, particularly if it falls back to the top of that bearish looking flag near 79.50 and that open gap near 78.70.
BND (bonds / F-fund) was flat as it digests last week big gains. The Fed and the CPI this week could shake thing up here.
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.
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The market breadth was positive on Monday, but more so in the Nasdaq and we also saw a surprise reversal in the number of new highs / new lows on the Nasdaq. We had been been seeing an alarming number of new lows vs. few new highs, but yesterday the new highs led handily. It was just the first day back from a holiday weekend, but it was not bad. Everyone keeps waiting for some kind of rotation into the small and broader indices and it has been a long waiting game with plenty of disappointment for those not riding the large cap tech wave.
I have been posting this chart every once in a while this year as it depicts the average movement of the Dow during election years. We don't invest directly in the Dow but the TSP funds have been chopping around the last couple of months with the C-fund leading by quite a bit over the last two months. The seasonality chart bottomed in May and historically June and July have been good, but surprisingly August, one of the worst months of the year outside of election years, has an explosive record during election years. Who knows what happens this year but perhaps this chart triggers some extra dip buying in July?
Source: seasonax.com with analysis from tsptalk.com
I have been watching the Dow Transportation Index for some kind of confirmation that this market leader is not dead, but yesterday was a setback. This head and shoulders pattern failure at the head test is a disappointment for the bulls as it is one of the outcomes of a head and shoulders pattern, especially one created in a downtrend.
This is how they typically play out, hence the disappointment as it trades back below resistance after failing at the head test.
Fed chair Jerome Powell will give his semiannual testimony to the Senate Banking Committee today and the House Financial Services Committee on Wednesday. We will also get the June CPI report on Thursday.
The S&P 500 (C-fund) made more new highs yesterday with its modest 0.10% gain. The spinning top could indicate a pause in the rally for a few days, but the dip buyers never seem far away. With Jerome Powell speaking a couple of times this week, there could be some volatility after the 5-day rally.
The S-fund (DWCPF) led for one of the few times in recent weeks but the chart is still facing some resistance. It did manage to close above that purple moving average, which has been of some significance on this chart this year. It has only closed above that average three other times since late May and each one of those failed the following day.
The EFA (I-fund) was dealing with a rising dollar and the surprising results in the French election. It had also hit a little resistance so I'm more interested to see how it deals with a pullback, particularly if it falls back to the top of that bearish looking flag near 79.50 and that open gap near 78.70.
BND (bonds / F-fund) was flat as it digests last week big gains. The Fed and the CPI this week could shake thing up here.
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.
