A big rally in stocks on Wednesday pushed the indices to the top of their ranges, up to resistance, or to higher highs in the case of the Nasdaq. The Dow gained more than 400-points while small caps led the way after rebounds in the Regional Banks and Energy sector. The dollar was up but looks a little toppy. Bonds were down as yields rallied again.
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The headlines are crediting optimism in the debt ceiling deal, but as always the market is looking for a catalyst, and this quiet economic news week was focusing on the debt ceiling negotiations, so in all practical senses the indices are still just trading in a range and until they resolve in one direction or the other, don't get too comfortable.
The action was quite bullish with more than 4 to 1 advancing trading volume over descending volume on both the NYSE and Nasdaq. There were a lot more new lows than new highs on both the NYSE and the Nasdaq, and that says a lot on a positive day when the Nasdaq Composite reached a level not seen since last August, suggesting the average stock is not participating in the rally.
The Regional Bank sector had a big day helping the small caps and the S-fund to hefty gains, but you can see that, like many charts, the rally took the KRE right up to some resistance. It probably needs to get back above 42 or even 44 to leap frog the overhead resistance and bring in more buyers.
The Atlanta Fed raised 2nd quarter GDP estimates up to 2.9% and that was part of the reason why we saw yields and the dollar up again.
The dollar does look a little toppy in the short term after a negative reversal day had it close near its lows of the day despite the gain. The gain did put pressure on the I-fund again.
More signs of possible economic strength can be see in the price of oil after a successful test of the lows, and now a possible higher low, although it would have to get above the recent high near 74 to officially call it a change in trend.
The Transportation Index is also particularly economically sensitive and it has a similar situation as the price of oil as it tries to hold above the double bottom and create a lower high.
I like the action in several charts, while others concern me. Being at the top of trading ranges, there is more work to be done for the bullish case. The Nasdaq has been doing that with their heavily weighted tech giants, but the S&P 500, small caps, and others shown above, have more work to do. Even a breakout wouldn't be confirmed unless it can hold for 3 or more days so again, I don't want to get too comfortable yet.
The S&P 500 (C-fund) found its way to the top of it recent range. Yesterday's action did show that the rising support is holding, but will the overhead resistance hold again and push it right back down, or will this index finally follow the Nasdaq to new highs? Obviously the debt ceiling issue is keeping investors worried, but it may not stop the market from climbing that wall of worry. That is unless we get another headline that squashes any hope for a resolution in DC.
The DWCPF (S-fund) jumped about 2% yesterday, regaining the losses from Tuesday and then some. It's above the 50-day EMA by a slim point, but that's a start. Some upside follow through is obviously needed here. It has closed above that old descending resistance line enough times to call it new support, although it is descending support.
The EFA (I-fund) was up but lagged with the rally in the dollar and the fact that stocks in the US didn't really take off until many of the overseas markets were already closed yesterday. It could get a nice catch up bounce today.
BND (Bonds / F-fund) was down with those higher yields yesterday. Despite calls for a recession, rising yields are suggesting that the bond market is not betting heavily on that outcome yet. Bond prices move counter to bond yields.
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
To get weekly or daily notifications when we post new commentary, sign up HERE.
Thanks so much 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 headlines are crediting optimism in the debt ceiling deal, but as always the market is looking for a catalyst, and this quiet economic news week was focusing on the debt ceiling negotiations, so in all practical senses the indices are still just trading in a range and until they resolve in one direction or the other, don't get too comfortable.
The action was quite bullish with more than 4 to 1 advancing trading volume over descending volume on both the NYSE and Nasdaq. There were a lot more new lows than new highs on both the NYSE and the Nasdaq, and that says a lot on a positive day when the Nasdaq Composite reached a level not seen since last August, suggesting the average stock is not participating in the rally.
The Regional Bank sector had a big day helping the small caps and the S-fund to hefty gains, but you can see that, like many charts, the rally took the KRE right up to some resistance. It probably needs to get back above 42 or even 44 to leap frog the overhead resistance and bring in more buyers.
The Atlanta Fed raised 2nd quarter GDP estimates up to 2.9% and that was part of the reason why we saw yields and the dollar up again.
The dollar does look a little toppy in the short term after a negative reversal day had it close near its lows of the day despite the gain. The gain did put pressure on the I-fund again.
More signs of possible economic strength can be see in the price of oil after a successful test of the lows, and now a possible higher low, although it would have to get above the recent high near 74 to officially call it a change in trend.
The Transportation Index is also particularly economically sensitive and it has a similar situation as the price of oil as it tries to hold above the double bottom and create a lower high.
I like the action in several charts, while others concern me. Being at the top of trading ranges, there is more work to be done for the bullish case. The Nasdaq has been doing that with their heavily weighted tech giants, but the S&P 500, small caps, and others shown above, have more work to do. Even a breakout wouldn't be confirmed unless it can hold for 3 or more days so again, I don't want to get too comfortable yet.
The S&P 500 (C-fund) found its way to the top of it recent range. Yesterday's action did show that the rising support is holding, but will the overhead resistance hold again and push it right back down, or will this index finally follow the Nasdaq to new highs? Obviously the debt ceiling issue is keeping investors worried, but it may not stop the market from climbing that wall of worry. That is unless we get another headline that squashes any hope for a resolution in DC.
The DWCPF (S-fund) jumped about 2% yesterday, regaining the losses from Tuesday and then some. It's above the 50-day EMA by a slim point, but that's a start. Some upside follow through is obviously needed here. It has closed above that old descending resistance line enough times to call it new support, although it is descending support.
The EFA (I-fund) was up but lagged with the rally in the dollar and the fact that stocks in the US didn't really take off until many of the overseas markets were already closed yesterday. It could get a nice catch up bounce today.
BND (Bonds / F-fund) was down with those higher yields yesterday. Despite calls for a recession, rising yields are suggesting that the bond market is not betting heavily on that outcome yet. Bond prices move counter to bond yields.
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
To get weekly or daily notifications when we post new commentary, sign up HERE.
Thanks so much 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.
