Stocks rallied back yesterday on... well something. Another more positive tweet from Trump, perhaps about a stand alone deal without other issues in the bill. The market appeared to have been focused on "targeted" aid, as in the case of the airlines, rather then the general stimulus, so it seems to be looking for a reason to rally. And it did. The Dow gained 531-points, the best one day gain since July. the small caps and the Transports led again.
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The selling on Tuesday was likely a shakeout of investors who thought this rally was being driven solely on the prospects of stimulus. I kind of wonder what those people who were selling on Tuesday were doing on Wednesday? Did they buy back in, or is this more money on the sidelines that can be reinvested?
What's the lesson from the last two days? Maybe it's to fade the tweets and the knee-jerk reactions to headlines. Yesterday's rally didn't really have a major catalyst so it felt like the market wants to go higher.
The internals are still trying to tell us that as the advance / decline volume was more than 5 to 1, or 84% up vs. down volume.
I feel sorry for those TSP participants who tried to take profits on Tuesday, selling their stock funds before the IFT deadline while stocks were moving up again, only to get caught in the whirlwind of the afternoon sell off, getting the worst price possible on their shares, and then it jumps right back the next day. That's probably happened at one time or another to all of us, and all we can do is curse the TSP's deadlines and limitations once again. But it is, what it is.
The charts improved with new highs in a few indices. The VIX is still high so I doubt everything will be straight up from here, but the dip buyers seem to be in full force at the moment.
Monday is Columbus Day and the stock market is open, but because it's a federal holiday, the TSP will not be processing transactions. Anything input for Monday will not be processed until Tuesday.
The S&P 500 (C-fund) had a great day getting back all of Tuesday's losses and almost getting to where it was at Tuesday's high before that negative reversal started. The chart still has a very clean inverted head and shoulders pattern, which tend to be bullish, but so far no breakout above the neckline near 3425. If it does breakout, the initial upside target would be about 3525, but the bulls would certainly try to push it toward the old highs, where it would be facing a double top situation.
Speaking of double tops, the DWCPF (S-fund) broke above its DT and continues to lead on the upside, and while we did see a higher high on Tuesday, Wednesday's close was a new all time closing high. The open gaps are there so we have to keep them in the back of our minds and may be sitting ducks after the election. The bulls will try to encourage yesterday's breakout level near 1625 to act as support, but more realistically, the rising red support line could get tested, and that angle of incline may also be too steep to maintain for very long.
The Dow Transportation Index made a new intraday and closing high, but it's not quite considered a breakout yet since it did not close above the prior high.
The EFA (I-fund) was up modestly as it sits above the 50-day EMA with no more open gaps in the vicinity. The old broken support line could act as resistance.
The High Yield Corporate Bond Fund (HYG) moved higher but remains below 84.75 which poses some resistance.
BND (F-fund) fell sharply as yields moved higher on more optimism about an eventual stimulus deal. That formation doesn't look good but the spinning top candlestick on Tuesday could still be indicating a change in direction is coming - despite the losses on Wednesday.
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
Thanks 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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The selling on Tuesday was likely a shakeout of investors who thought this rally was being driven solely on the prospects of stimulus. I kind of wonder what those people who were selling on Tuesday were doing on Wednesday? Did they buy back in, or is this more money on the sidelines that can be reinvested?
What's the lesson from the last two days? Maybe it's to fade the tweets and the knee-jerk reactions to headlines. Yesterday's rally didn't really have a major catalyst so it felt like the market wants to go higher.
The internals are still trying to tell us that as the advance / decline volume was more than 5 to 1, or 84% up vs. down volume.
I feel sorry for those TSP participants who tried to take profits on Tuesday, selling their stock funds before the IFT deadline while stocks were moving up again, only to get caught in the whirlwind of the afternoon sell off, getting the worst price possible on their shares, and then it jumps right back the next day. That's probably happened at one time or another to all of us, and all we can do is curse the TSP's deadlines and limitations once again. But it is, what it is.
The charts improved with new highs in a few indices. The VIX is still high so I doubt everything will be straight up from here, but the dip buyers seem to be in full force at the moment.
Monday is Columbus Day and the stock market is open, but because it's a federal holiday, the TSP will not be processing transactions. Anything input for Monday will not be processed until Tuesday.
The S&P 500 (C-fund) had a great day getting back all of Tuesday's losses and almost getting to where it was at Tuesday's high before that negative reversal started. The chart still has a very clean inverted head and shoulders pattern, which tend to be bullish, but so far no breakout above the neckline near 3425. If it does breakout, the initial upside target would be about 3525, but the bulls would certainly try to push it toward the old highs, where it would be facing a double top situation.
Speaking of double tops, the DWCPF (S-fund) broke above its DT and continues to lead on the upside, and while we did see a higher high on Tuesday, Wednesday's close was a new all time closing high. The open gaps are there so we have to keep them in the back of our minds and may be sitting ducks after the election. The bulls will try to encourage yesterday's breakout level near 1625 to act as support, but more realistically, the rising red support line could get tested, and that angle of incline may also be too steep to maintain for very long.
The Dow Transportation Index made a new intraday and closing high, but it's not quite considered a breakout yet since it did not close above the prior high.
The EFA (I-fund) was up modestly as it sits above the 50-day EMA with no more open gaps in the vicinity. The old broken support line could act as resistance.
The High Yield Corporate Bond Fund (HYG) moved higher but remains below 84.75 which poses some resistance.
BND (F-fund) fell sharply as yields moved higher on more optimism about an eventual stimulus deal. That formation doesn't look good but the spinning top candlestick on Tuesday could still be indicating a change in direction is coming - despite the losses on Wednesday.
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
Thanks 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.
