A positive open was met with some midday selling, but the bulls came back by the close to end another positive Monday. For the Nasdaq, the streak continued as it made it 18 consecutive positive Mondays. Bond yields and the dollar were up and that kept the bulls at bay for a while, but most of the major indices held some onto modest gains, although the small caps lagged badly. There could be a battle this week between some overhead resistance with open gaps below, and positive momentum after last week's explosive rally off the lows.
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The loss in the small caps was a drag on the S-fund, but it also turned the internal numbers negative as there were three stocks down for every one that was positive on the NYSE yesterday, and even the gains in the Nasdaq had to overcome a 2 - 1 advantage for declining share volume over the advancing shares. We also saw 106 new 52-week lows on the Nasdaq despite the big rally over the last week.
The 10-year Treasury Yield reversed up to closed off the lows on Friday which created a moderate positive reversal day, and yesterday we saw some upside follow through to that reversal. This put a little pressure on stocks, especially the interest rate sensitive small caps. The blue trading channel was broken last week so perhaps this move up may be just an attempt to fill that over open gap near 48. We'll see if that old support near 4.8% is going to act as resistance if it tested again.
The dollar also has a couple of overhead open gaps, and yesterday it was up slightly as it tried to hold above the 50-day EMA at the lows. As I mentioned yesterday, the Fed is aggressively reducing their balance sheet and that may keep the dollar relatively buoyant.
As goes Apple, so goes the market - has been in play since the late July highs, and going back further than that actually. After seeing some selling in Apple after they reported earnings late last Thursday, the AAPL chart filled an open gap then headed back up. Now, just like the S&P 500, it is testing some resistance areas and it wouldn't be a stretch to believe what happens to Apple at this juncture of resistance, is very likely what could happen to the S&P 500.
Yesterday the market breadth, stocks up vs. down, was in favor of the down side, but last week there were plenty of positive triggers in the breadth thrust category that suggests a major bullish shift in the market is here. As we'll see in the charts below, there are some gaps that need to get filled below first, so while the market is acting surprisingly well despite the higher interest rates and the threat of a recession in 2024, the short-term is still suspect as the charts may need to do some backing and filling before last week's rally can resume.
That said, the pros in places like Goldman Sachs know what the small traders are doing and thinking, and they could easily push things higher to force the hand of the small traders to cover short positions (buy to cover) or chase on the upside -- if that makes sense. We've seen this type of stuff often over the last year or two where bullish formations fail to break out, and bearish formations are better off being bought. It's manipulation. It doesn't really effect the buy and holder, but if you're trying to time the market, their actions can make things confusing, which is their goal.
The S&P 500 (C-fund) was up slightly but at least for another day, the overhead descending resistance held again. There is more resistance near 4400, but it would have to leap above the top of the blue channel to get there. I believe at least one of the open gaps below will get filled, and why not both? That would help the bulls if stocks start back up because how long would you want to look over your shoulder at an open gap that could get filled, while being fully invested? We're talking about 125 S&P points to fill that lower gap near 4250.
The DWCPF (S-fund) did not participate in the rally yesterday and that was the cause of the deeply negative market breadth with 3 stocks down for every one up on the NYSE. The open gaps are below and wide, and on most of the main index charts the resistance is clear as the 50-day EMA held as resistance after just one failed close above it. This looks suspect in the short-term, even if the October lows do end up being the bottom.
The EFA (I-fund) is also battling heavy resistance and open gaps below. That makes the risk / reward here more on the risky side, at least until the chart cleans up a bit. A move above 70.50 and the bulls will have more talking points.
BND (bonds / F-fund) was down sharply after Friday's negative reversal. Yesterday's dip did fill in that gap but opened a new small gap on the upside. The 69 area is a possible target for some backing and filling here as well with the open gap below, and resistance overhead. As you can see in the smaller, close up chart --- gaps tend to get filled eventually.
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.
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The loss in the small caps was a drag on the S-fund, but it also turned the internal numbers negative as there were three stocks down for every one that was positive on the NYSE yesterday, and even the gains in the Nasdaq had to overcome a 2 - 1 advantage for declining share volume over the advancing shares. We also saw 106 new 52-week lows on the Nasdaq despite the big rally over the last week.
The 10-year Treasury Yield reversed up to closed off the lows on Friday which created a moderate positive reversal day, and yesterday we saw some upside follow through to that reversal. This put a little pressure on stocks, especially the interest rate sensitive small caps. The blue trading channel was broken last week so perhaps this move up may be just an attempt to fill that over open gap near 48. We'll see if that old support near 4.8% is going to act as resistance if it tested again.
The dollar also has a couple of overhead open gaps, and yesterday it was up slightly as it tried to hold above the 50-day EMA at the lows. As I mentioned yesterday, the Fed is aggressively reducing their balance sheet and that may keep the dollar relatively buoyant.
As goes Apple, so goes the market - has been in play since the late July highs, and going back further than that actually. After seeing some selling in Apple after they reported earnings late last Thursday, the AAPL chart filled an open gap then headed back up. Now, just like the S&P 500, it is testing some resistance areas and it wouldn't be a stretch to believe what happens to Apple at this juncture of resistance, is very likely what could happen to the S&P 500.
Yesterday the market breadth, stocks up vs. down, was in favor of the down side, but last week there were plenty of positive triggers in the breadth thrust category that suggests a major bullish shift in the market is here. As we'll see in the charts below, there are some gaps that need to get filled below first, so while the market is acting surprisingly well despite the higher interest rates and the threat of a recession in 2024, the short-term is still suspect as the charts may need to do some backing and filling before last week's rally can resume.
That said, the pros in places like Goldman Sachs know what the small traders are doing and thinking, and they could easily push things higher to force the hand of the small traders to cover short positions (buy to cover) or chase on the upside -- if that makes sense. We've seen this type of stuff often over the last year or two where bullish formations fail to break out, and bearish formations are better off being bought. It's manipulation. It doesn't really effect the buy and holder, but if you're trying to time the market, their actions can make things confusing, which is their goal.
The S&P 500 (C-fund) was up slightly but at least for another day, the overhead descending resistance held again. There is more resistance near 4400, but it would have to leap above the top of the blue channel to get there. I believe at least one of the open gaps below will get filled, and why not both? That would help the bulls if stocks start back up because how long would you want to look over your shoulder at an open gap that could get filled, while being fully invested? We're talking about 125 S&P points to fill that lower gap near 4250.
The DWCPF (S-fund) did not participate in the rally yesterday and that was the cause of the deeply negative market breadth with 3 stocks down for every one up on the NYSE. The open gaps are below and wide, and on most of the main index charts the resistance is clear as the 50-day EMA held as resistance after just one failed close above it. This looks suspect in the short-term, even if the October lows do end up being the bottom.
The EFA (I-fund) is also battling heavy resistance and open gaps below. That makes the risk / reward here more on the risky side, at least until the chart cleans up a bit. A move above 70.50 and the bulls will have more talking points.
BND (bonds / F-fund) was down sharply after Friday's negative reversal. Yesterday's dip did fill in that gap but opened a new small gap on the upside. The 69 area is a possible target for some backing and filling here as well with the open gap below, and resistance overhead. As you can see in the smaller, close up chart --- gaps tend to get filled eventually.
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.
