Stocks were mixed yesterday, although mostly negative as the market digested Monday's big gains and traders try to make sense of the recent volatility. The Dow lost 158-points while the S&P 500 (C-fund) saw minor losses. Small caps and the I-fund, the more volatile funds, were down more percentage-wise, but they both held onto some of Monday's big gains. Bonds were down slightly as the 10-year Treasury Yields pushed back above 4%.
[TABLE="align: center"]
[TR]
[TD="align: center"]
[/TD]
[TD]
[/TD]
[TD="width: 338, align: center"] Daily TSP Funds Return
[TABLE="align: center"]
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
It was a pretty broad sell off yesterday with declining issues outpacing advancers 4600 to 2400, or just over 2 to 1, but that was following Monday's big day of gains where advancers led decliners at closer to a 3 to 1 ratio.
So this was a case of digesting a big day of gains and sometimes the key is whether the digesting pullback is greater than 50% of the gain, which it was not, although the I-fund did suffer a loss of more than 50% of Monday's gains because of a big rally in the dollar.
The dollar gained 0.33%, which is big daily move for UUP, and that bull flag (blue) looks like it really wants to breakout to the upside with yesterday's move above the red descending resistance line, but the 50-day EMA is still in the way. There was a false breakout above the 50-day EMA in December so we need to give it some wiggle room above and below resistance before either side can claim victory.
The 10-yearTreasury Yield moved back above 4% yesterday after Monday's tick below that level. It's also above its red resistance line but testing a major moving average.
The pump and dump on Monday and Tuesday was reminiscent of the start of the year 2000 which we have been referencing recently because of the similarity in the charts from now and the end of 1999 into 2000. There was a steep decline in the first three days of trading in 2000, followed by a big spike higher that tested the highs and then it flipped over again. We've seen three pieces of that scenario, the strong rally in December to new highs, a sharp pullback to start the year, and a snap back rally on day number four. Should this comparison continue, we could see more upside even if the market is trying to peak.
We'll get the CPI report on Thursday, and the PPI report on Friday, and with the market pricing more interest rate cuts than the Fed is suggesting, these reports will be key for the bond market and the Fed Funds rate expectations.
Admin note: Thanks so much for the great response to our sale prices so far! We are celebrating our 20th anniversary this month and we're offering a discount on our annual subscriptions this week to new and current subscribers. You can sign up to a new service or add a year or two (in some cases) to your current subscription for 20% off the regular price (or 50% in some cases.) Thanks!
Use this link for more information: TSP Talk - Annual Subscription Sale
The S&P 500 (C-fund) saw a modest loss yesterday following Mondays big gain, and that's nothing to be concerned about yet. The pullback that took it below that broken support line (red dashed) was overdue and a pullback to the 20-day EMA is all healthy action. Even a move to the 50-day EMA would be OK at this point, but in a strong market you like to see the 20-day EMA hold on the first test. I suspect another shot at the highs is very possible, but that's where next test would be since we know the all time high is just over 4800 and the double top pullback is still in affect.
DWCPF (S-fund) has been doing a decent job of filling in nearby open gaps (blue), and the next closest open gap is up near 1960. It's not shown but this closed back above its 20-day EMA (currently 1906) for the last two days, and 3 to 5 closes above it would be a good sign. It broke some rising support on January 2nd but it's still in a rising channel. That channel may have just gotten wider recently.
EFA (I-fund) took a hit yesterday with the dollar up 0.33%. It is holding its 20-day EMA as well, but yesterday's action in the dollar, which broke above resistance, gives me some concern for the I-fund. It could all reverse back today if can continue to hold that 20-day EMA, but it may get more vulnerable if the dollar decides to bust higher.
BND (bonds / F-fund) was basically flat yesterday but so far it is holding above that recently filled open gap (blue rectangle) and yesterday's sideways action was enough to push it above the short-term descending resistance line. With the CPI and PPI reports coming up, we could get more definitive directions on rates and yields very soon.
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
Daily Market Commentary Archives
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.
[TABLE="align: center"]
[TR]
[TD="align: center"]
[TD]
[/TD]
[TD="width: 338, align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
It was a pretty broad sell off yesterday with declining issues outpacing advancers 4600 to 2400, or just over 2 to 1, but that was following Monday's big day of gains where advancers led decliners at closer to a 3 to 1 ratio.
So this was a case of digesting a big day of gains and sometimes the key is whether the digesting pullback is greater than 50% of the gain, which it was not, although the I-fund did suffer a loss of more than 50% of Monday's gains because of a big rally in the dollar.
The dollar gained 0.33%, which is big daily move for UUP, and that bull flag (blue) looks like it really wants to breakout to the upside with yesterday's move above the red descending resistance line, but the 50-day EMA is still in the way. There was a false breakout above the 50-day EMA in December so we need to give it some wiggle room above and below resistance before either side can claim victory.
The 10-yearTreasury Yield moved back above 4% yesterday after Monday's tick below that level. It's also above its red resistance line but testing a major moving average.
The pump and dump on Monday and Tuesday was reminiscent of the start of the year 2000 which we have been referencing recently because of the similarity in the charts from now and the end of 1999 into 2000. There was a steep decline in the first three days of trading in 2000, followed by a big spike higher that tested the highs and then it flipped over again. We've seen three pieces of that scenario, the strong rally in December to new highs, a sharp pullback to start the year, and a snap back rally on day number four. Should this comparison continue, we could see more upside even if the market is trying to peak.
We'll get the CPI report on Thursday, and the PPI report on Friday, and with the market pricing more interest rate cuts than the Fed is suggesting, these reports will be key for the bond market and the Fed Funds rate expectations.
Admin note: Thanks so much for the great response to our sale prices so far! We are celebrating our 20th anniversary this month and we're offering a discount on our annual subscriptions this week to new and current subscribers. You can sign up to a new service or add a year or two (in some cases) to your current subscription for 20% off the regular price (or 50% in some cases.) Thanks!
Use this link for more information: TSP Talk - Annual Subscription Sale
The S&P 500 (C-fund) saw a modest loss yesterday following Mondays big gain, and that's nothing to be concerned about yet. The pullback that took it below that broken support line (red dashed) was overdue and a pullback to the 20-day EMA is all healthy action. Even a move to the 50-day EMA would be OK at this point, but in a strong market you like to see the 20-day EMA hold on the first test. I suspect another shot at the highs is very possible, but that's where next test would be since we know the all time high is just over 4800 and the double top pullback is still in affect.
DWCPF (S-fund) has been doing a decent job of filling in nearby open gaps (blue), and the next closest open gap is up near 1960. It's not shown but this closed back above its 20-day EMA (currently 1906) for the last two days, and 3 to 5 closes above it would be a good sign. It broke some rising support on January 2nd but it's still in a rising channel. That channel may have just gotten wider recently.
EFA (I-fund) took a hit yesterday with the dollar up 0.33%. It is holding its 20-day EMA as well, but yesterday's action in the dollar, which broke above resistance, gives me some concern for the I-fund. It could all reverse back today if can continue to hold that 20-day EMA, but it may get more vulnerable if the dollar decides to bust higher.
BND (bonds / F-fund) was basically flat yesterday but so far it is holding above that recently filled open gap (blue rectangle) and yesterday's sideways action was enough to push it above the short-term descending resistance line. With the CPI and PPI reports coming up, we could get more definitive directions on rates and yields very soon.
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
Daily Market Commentary Archives
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.
