Stocks reversed a big intraday loss on Friday to close flat. That reversal action rolled over into Monday and we saw big gains across the board. This time it was the large caps that outperformed, and the bigger the better as the Dow gained 2%, the S&P was close behind at +1.89%, then the Nasdaq picking up 1.6%, and then the small caps which added about 1%. The I-fund also had a good day with the dollar falling sharply. Bonds were down as yields ticked higher.
[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]
Before we get to the market I wanted to mention that there were a few members who said that had issues making trades yesterday and they thought that perhaps the TSP had shut down the interfund transfers earlier than we expected. Some had to call in because the website wasn't allowing them to enter the transaction. Eventually most of them were able to get their IFT in (you need your account number to do so) and get the transaction done, but some did not make the 12 noon ET deadline because of the delay.
So, if you are making an interfund transfer this week, and this will probably be true directly after the new system is in place as well, you may want to start a little early to account for any delays you may experience.
We've been down this road before. We got a big bounce in this bearish downtrend / bear market and the question on everyone's mind is whether this is another 1 to 3 day wonder, or if we will get a real bear market rally, which history suggests can be intense. It may not seem like it, but the S&P 500 is already 4.3% above Friday's lows so this has been a nice bounce, but bear market rallies can go further.
You can see that since the peak of the bull market to start the year we've had a few relief rallies. This one is now 2 days old if we count Friday's reversal to the flat line. We saw several 3-4 days rallies, again including positive reversal days that may have actually been down days, and just one meaningful bear market rally that lasted 11 trading days. If the 3,4, 11 day pattern can repeat, we may have something here, but many investors are concerned that we haven't had a capitulation, and I would have preferred to have seen higher volume in some of the recent reversals
The futures opened down sharply on Monday evening after a 30% decline in SNAP after hours, and Meta (Facebook) was down 10% on this news so this morning there's already some headwinds in the face of the two day rebound. The S&P futures had given back about half of Monday's gains at last check.
The market didn't react very much to the Biden administrations comments being willing to use force to defend Taiwan from China, and that may become a problem. Airbnb announced that they are pulling out of China, and if we start seeing a move like we saw in Russia with companies like McDonalds and Starbucks pulling out, the market may have another reason to stay cranky.
The leader yesterday were the financial stocks and the action pushed the XLF above its short-term descending resistance line, but that placed it right under its 20-day EMA, which has been acting as resistance as well, so we have another test today already. The financials are a sector that, if it can get hot, could boost some confidence in investors, which has been in the tank for months now.
The Yield on the 10-Year Treasury was up yesterday but has been moving sideways for more than a week and it has now closed below its 20-day EMA for three straight days. It looks a little toppy and a pullback in yields could help the stock market with any relief rally.
The dollar is also pulling back, and that helps prices as we saw yesterday. It did close below that 35 day average which seems to have some significance.
Fed Chair Powell is schedule to speak today and we know that at times it could take just one sentence to move the market in a big way, so be prepared for some possible volatility today.
Reminder: The TSP will stop processing IFTs after noon ET on May 26 through the "first week in June."What exact day the first week of June is, I don't know yet. More: [url]https://www.tsp.gov/new-tsp-features/key-transition-dates
[/URL]
The S&P 500 (C-fund) rallied right up to the top of its recent descending trading channel, and judging by the sell off in the futures on Monday evening, that resistance may be coming into play already, and unless something changes during Monday night / Tuesday morning's futures session, we could potentially be looking at a test of the lows. A more bullish outcome would obviously be a breakout above the channel but the 20-day EMA is not far above that. So, we are due for a good relief rally, but the bad news seems to come easily during a bear markets.
The DWCPF (S-fund) has some interesting set ups with a small bull flag (blue) within a larger bear flag (red) and the descending resistance line just above yesterday's close.
[/FONT]
The EFA (I-fund) rallied and the nearly 1% decline in the dollar once again helped here and we saw the chart break above the flag-like formation that I mentioned on Monday. The 50-day EMA and a resistance line are now just one point above.
BND (bonds / F-fund) has been chopping back and forth the last few trading days as it tests the 76.40 area which has been a tough area to crack this month. We have seen a break above some resistance in recent treading days so something may be changing here.
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 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.
[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]
Before we get to the market I wanted to mention that there were a few members who said that had issues making trades yesterday and they thought that perhaps the TSP had shut down the interfund transfers earlier than we expected. Some had to call in because the website wasn't allowing them to enter the transaction. Eventually most of them were able to get their IFT in (you need your account number to do so) and get the transaction done, but some did not make the 12 noon ET deadline because of the delay.
So, if you are making an interfund transfer this week, and this will probably be true directly after the new system is in place as well, you may want to start a little early to account for any delays you may experience.
We've been down this road before. We got a big bounce in this bearish downtrend / bear market and the question on everyone's mind is whether this is another 1 to 3 day wonder, or if we will get a real bear market rally, which history suggests can be intense. It may not seem like it, but the S&P 500 is already 4.3% above Friday's lows so this has been a nice bounce, but bear market rallies can go further.
You can see that since the peak of the bull market to start the year we've had a few relief rallies. This one is now 2 days old if we count Friday's reversal to the flat line. We saw several 3-4 days rallies, again including positive reversal days that may have actually been down days, and just one meaningful bear market rally that lasted 11 trading days. If the 3,4, 11 day pattern can repeat, we may have something here, but many investors are concerned that we haven't had a capitulation, and I would have preferred to have seen higher volume in some of the recent reversals
The futures opened down sharply on Monday evening after a 30% decline in SNAP after hours, and Meta (Facebook) was down 10% on this news so this morning there's already some headwinds in the face of the two day rebound. The S&P futures had given back about half of Monday's gains at last check.
The market didn't react very much to the Biden administrations comments being willing to use force to defend Taiwan from China, and that may become a problem. Airbnb announced that they are pulling out of China, and if we start seeing a move like we saw in Russia with companies like McDonalds and Starbucks pulling out, the market may have another reason to stay cranky.
The leader yesterday were the financial stocks and the action pushed the XLF above its short-term descending resistance line, but that placed it right under its 20-day EMA, which has been acting as resistance as well, so we have another test today already. The financials are a sector that, if it can get hot, could boost some confidence in investors, which has been in the tank for months now.
The Yield on the 10-Year Treasury was up yesterday but has been moving sideways for more than a week and it has now closed below its 20-day EMA for three straight days. It looks a little toppy and a pullback in yields could help the stock market with any relief rally.
The dollar is also pulling back, and that helps prices as we saw yesterday. It did close below that 35 day average which seems to have some significance.
Fed Chair Powell is schedule to speak today and we know that at times it could take just one sentence to move the market in a big way, so be prepared for some possible volatility today.
Reminder: The TSP will stop processing IFTs after noon ET on May 26 through the "first week in June."What exact day the first week of June is, I don't know yet. More: [url]https://www.tsp.gov/new-tsp-features/key-transition-dates
[/URL]
The S&P 500 (C-fund) rallied right up to the top of its recent descending trading channel, and judging by the sell off in the futures on Monday evening, that resistance may be coming into play already, and unless something changes during Monday night / Tuesday morning's futures session, we could potentially be looking at a test of the lows. A more bullish outcome would obviously be a breakout above the channel but the 20-day EMA is not far above that. So, we are due for a good relief rally, but the bad news seems to come easily during a bear markets.
The DWCPF (S-fund) has some interesting set ups with a small bull flag (blue) within a larger bear flag (red) and the descending resistance line just above yesterday's close.
[/FONT]
The EFA (I-fund) rallied and the nearly 1% decline in the dollar once again helped here and we saw the chart break above the flag-like formation that I mentioned on Monday. The 50-day EMA and a resistance line are now just one point above.
BND (bonds / F-fund) has been chopping back and forth the last few trading days as it tests the 76.40 area which has been a tough area to crack this month. We have seen a break above some resistance in recent treading days so something may be changing here.
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 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.
