Stocks gapped open higher on Tuesday despite an overnight scare triggered by a statement from White House trade advisor Peter Navarro. After all was said and done we saw solid gains from the indices, but it was another day with a strong open and a weak close as the indices closed well off their highs.
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Perhaps the late selling yesterday had to do with Navarro's "misstatement" the night before making investors less excited about holding overnight last night. He had said the China deal was dead, but later clarified that he meant phase 2 of the deal, and not the one that is already in place. You can see what that did to the S&P 500 futures on Monday evening, but the whole thing reversed and the losses (about 2%) were back within an hour. Ironically, the futures closed yesterday right about where they were before Navarro's statement on Monday night.
So we saw a little bit of jitters going into the close yesterday and the S&P 500, as you'll see in the chart down below, is still having a difficult time filling the overhead gap from that 1800-point sell-off day, despite several attempts to do so.
Right now the markets seems to be waiting for more word on PPP, unemployment extensions, and stimulus, while the economy slowly gets back on its feet.
We get some important economic data tomorrow with a new week of initial jobless claims data, plus an update to the GDP report.
The S&P 500 (C-fund) has been trying to reach up to fill that open gap near 3180, but the 3155 area seem to be a tough nut to crack. The trading channel is still rising and the support line is coming up from below as the S&P treads water for the last 5 or 6 days. That sideways action also happens to look like a bull flag and yesterday could have been a breakout, although it would have been more bullish if it closed near the highs. Instead it tried to fill the morning's open gap, which really isn't a bad thing.
The DWCPF (S-fund) also broke out of a small bull flag and this one actually already filled its overhead open gap. It's trying to remain above the lower end of its rising trading channel.
The EFA (I-fund) ran up and did fill its open gap near 52.50, and although it closed off the highs, it did manage to barely close above the 200-day SMA (orange line.) The dollar was down again, and helped.
The dollar has been a good contrarian indicator for stocks, and yesterday's tumble helped lift stocks again. It did rally to close off the lows - the opposite of what the stock indices did - and there is a small overhead gap which could indicate that stocks could have another brief dip while this fills its gap.
The Dow Transportation Index had a big day and it has so far remain above the 50-day EMA after failing to break back above the 200-day EMA last week.
The Nasdaq and tech stocks continue to do very well, particularly the large tech stocks. It made a new high yesterday but it also made a negative reversal pattern after gapping up higher at yesterday's open and closing near the lows. It could be the start of a little pullback, but right now the momentum in tech seems strong enough that any dip will likely be bought.
BND (bonds / F-fund) was down slightly and the chart is showing a few cracks after falling below a rising support line.
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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Perhaps the late selling yesterday had to do with Navarro's "misstatement" the night before making investors less excited about holding overnight last night. He had said the China deal was dead, but later clarified that he meant phase 2 of the deal, and not the one that is already in place. You can see what that did to the S&P 500 futures on Monday evening, but the whole thing reversed and the losses (about 2%) were back within an hour. Ironically, the futures closed yesterday right about where they were before Navarro's statement on Monday night.
So we saw a little bit of jitters going into the close yesterday and the S&P 500, as you'll see in the chart down below, is still having a difficult time filling the overhead gap from that 1800-point sell-off day, despite several attempts to do so.
Right now the markets seems to be waiting for more word on PPP, unemployment extensions, and stimulus, while the economy slowly gets back on its feet.
We get some important economic data tomorrow with a new week of initial jobless claims data, plus an update to the GDP report.
The S&P 500 (C-fund) has been trying to reach up to fill that open gap near 3180, but the 3155 area seem to be a tough nut to crack. The trading channel is still rising and the support line is coming up from below as the S&P treads water for the last 5 or 6 days. That sideways action also happens to look like a bull flag and yesterday could have been a breakout, although it would have been more bullish if it closed near the highs. Instead it tried to fill the morning's open gap, which really isn't a bad thing.
The DWCPF (S-fund) also broke out of a small bull flag and this one actually already filled its overhead open gap. It's trying to remain above the lower end of its rising trading channel.
The EFA (I-fund) ran up and did fill its open gap near 52.50, and although it closed off the highs, it did manage to barely close above the 200-day SMA (orange line.) The dollar was down again, and helped.
The dollar has been a good contrarian indicator for stocks, and yesterday's tumble helped lift stocks again. It did rally to close off the lows - the opposite of what the stock indices did - and there is a small overhead gap which could indicate that stocks could have another brief dip while this fills its gap.
The Dow Transportation Index had a big day and it has so far remain above the 50-day EMA after failing to break back above the 200-day EMA last week.
The Nasdaq and tech stocks continue to do very well, particularly the large tech stocks. It made a new high yesterday but it also made a negative reversal pattern after gapping up higher at yesterday's open and closing near the lows. It could be the start of a little pullback, but right now the momentum in tech seems strong enough that any dip will likely be bought.
BND (bonds / F-fund) was down slightly and the chart is showing a few cracks after falling below a rising support line.
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.
