The bulls managed to put back to back winning days together for just the second time this month. The Dow gained a modest 115-points while the broader indices performed even better. The S&P 500 hit 4200 for the first time since last August, and the Nasdaq is also at August 2022 levels. Both still have a long way to go to reach the all time highs, but it's a start and it is doing so while the market is battling many fundamental roadblocks. Bonds broke down as yields and the dollar continue to plow higher.
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The yield on the 10-year Treasury has been rallying for the last week and the open gap near 3.9% looks like a potential target, but it now faces some overhead resistance in the form of a triple top in what may still be considered a bear flag (blue.) If that resistance holds, this could be a good time to buy bonds, but the F-fund broke down yesterday, so maybe not just yet.
BND (Bonds / F-fund) shows the breakdown from the "F" flag and it too has a large open gap in its sites, this one on the downside, so maybe buying into the F-fund is premature, now that support has broken?
The 2/10 year Treasury yield curve is still very much inverted leaving the door open for that recession that we still haven't seen. The 2-year Treasury Yield is currently 4.27% and the 10-year is 3.65%, and in recent weeks it has become even more inverted.
That hasn't stopped the S&P 500 from reaching up to recent highs as it surpassed the prior 2023 highs and is now just below an open gap opened way back in August. If the top of the gap doesn't stop it, there's not a whole lot more resistance until about 4300.
The Transportation Index and the small caps are still in some technical trouble, both being stuck under resistance for several weeks or more.
The small caps have made some progress recently by climbing back above the longer-term resistance line, and yesterday the IWM Russell 2000 ETF closed above its 50-day EMA for the first time since early March.
There are obviously plenty of concerns out there including the ongoing debt ceiling negotiations, the possibility of a recession, the jobs market finally starting to weaken thanks to the Fed's push to slow down the economy, banks tightening lending conditions - all of which should be rough on stocks, but none of this is new information and the market has been pricing it all in. Now it's climbing the wall of worry. Besides some technical analysis issues, the one thing that could stop the bulls is a "sell the news" reaction to this "buy the debt ceiling deal rumor" rally.
The S&P 500 (C-fund) closed at its highest level in a long time but may be at another double top - if we don't consider the May 1 high a double top since it never actually got there. 4200 has been the top of the range so selling up here could be the knee-jerk reaction, but this index has been coiling for a big move for quite a while and the long consolidation may have built up some strength if it does want to breakout. The PMO indicator is moving back above its moving average again.
The DWCPF (S-fund) is still in that big bearish looking flag after yesterday's gain, but it did finally blast though the 50-day EMA. That's a good sign but the 1670 -1680 area could still be formidable resistance.
The EFA (I-fund) has been lagging in recent days because of the sharp move higher in the dollar recently. There's some resistance above 28.40 and lots of open gaps below, so the short term could get interesting here. The 20-day EMA and the February high both continue to hold as support.
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. Have a great weekend!
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 yield on the 10-year Treasury has been rallying for the last week and the open gap near 3.9% looks like a potential target, but it now faces some overhead resistance in the form of a triple top in what may still be considered a bear flag (blue.) If that resistance holds, this could be a good time to buy bonds, but the F-fund broke down yesterday, so maybe not just yet.
BND (Bonds / F-fund) shows the breakdown from the "F" flag and it too has a large open gap in its sites, this one on the downside, so maybe buying into the F-fund is premature, now that support has broken?
The 2/10 year Treasury yield curve is still very much inverted leaving the door open for that recession that we still haven't seen. The 2-year Treasury Yield is currently 4.27% and the 10-year is 3.65%, and in recent weeks it has become even more inverted.
That hasn't stopped the S&P 500 from reaching up to recent highs as it surpassed the prior 2023 highs and is now just below an open gap opened way back in August. If the top of the gap doesn't stop it, there's not a whole lot more resistance until about 4300.
The Transportation Index and the small caps are still in some technical trouble, both being stuck under resistance for several weeks or more.
The small caps have made some progress recently by climbing back above the longer-term resistance line, and yesterday the IWM Russell 2000 ETF closed above its 50-day EMA for the first time since early March.
There are obviously plenty of concerns out there including the ongoing debt ceiling negotiations, the possibility of a recession, the jobs market finally starting to weaken thanks to the Fed's push to slow down the economy, banks tightening lending conditions - all of which should be rough on stocks, but none of this is new information and the market has been pricing it all in. Now it's climbing the wall of worry. Besides some technical analysis issues, the one thing that could stop the bulls is a "sell the news" reaction to this "buy the debt ceiling deal rumor" rally.
The S&P 500 (C-fund) closed at its highest level in a long time but may be at another double top - if we don't consider the May 1 high a double top since it never actually got there. 4200 has been the top of the range so selling up here could be the knee-jerk reaction, but this index has been coiling for a big move for quite a while and the long consolidation may have built up some strength if it does want to breakout. The PMO indicator is moving back above its moving average again.
The DWCPF (S-fund) is still in that big bearish looking flag after yesterday's gain, but it did finally blast though the 50-day EMA. That's a good sign but the 1670 -1680 area could still be formidable resistance.
The EFA (I-fund) has been lagging in recent days because of the sharp move higher in the dollar recently. There's some resistance above 28.40 and lots of open gaps below, so the short term could get interesting here. The 20-day EMA and the February high both continue to hold as support.
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. Have a great weekend!
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.
