After a few days of some concern, the big three indices all ended the week at new all time closing highs on Friday. The Dow gained 448-points and led the those big three with a 1.3% gain, but the recently beaten down small caps jumped almost 2% to end the week. The I-fund also rallied nicely with a dip in the dollar helping, and bonds rolled over as yields bounced back.
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Despite the losses on Thursday, we did see some positive reversals and that led to some upside follow-through for the yield on the 10-year Treasury, and of course the stocks market, which had been getting a little concerned with the continued weakness in yields, celebrated with a big rally when they turned higher on Friday.
The dollar was down for a second straight day but it is now resting on a couple off support levels including the 200-day EMA. There's an open gap below 24.60 so it would have to get back below that 200-day average to fill it.
The technical picture improved on Friday with the indices closing at all time highs, but we still see some resistance in the area and some of the charts may still be overly extended. The small caps and I-fund did pull back more meaningfully recently and may have more room to run, but relative weakness can be a detriment as well.
Seasonality is on the bulls' side this week, but that will change net week.
The S&P 500 (C-fund) popped right back to new highs after the one day pullback on Thursday, which actually turned into a positive reversal day so the bears continue to have little to no influence on this market - at least the large cap indices. The bad news is, overhead resistance is being hit again. The good news, the resistance line is still rising.
The DWCPF (S-fund) led on the upside on Friday after a nasty pullback that lasted a week or two. It happened to close right at the resistance line from the prior highs on Friday, after the failed breakout in June. It looks like a make or break area for small caps.
The EFA / I-fund recovered nicely from Thursday's breakdown. That looked like a possible bear flag being formed, but Friday's action helped. The EFA is also testing that high from back in May again, an area that seems to have some significance on this chart. I believe we need to see more upside here or the bear flag could remain in the picture. Remember, the dollar is sitting on the 200-day EMA and if that bounces back, it could pose some trouble here for the I-fund.
The Dow Transportation Index closed below that key 100-day average on Thursday, but bounced back above it on Friday. It had been trading above that average for months and it has held on each prior test, so this was a significant rebound. However the bear flag may still be in play.
Yields finally bounced and the BND (bonds / F-fund) fell sharply after the 4-day rally put it back up near the February highs. The top of that red rising trading channel could try to hold as support now, and if it does hold, we could have some trouble on our hands for the stock market, which seems to be trying to make sense of why yields had been moving steadily lower in an economic expansion.
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.
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Despite the losses on Thursday, we did see some positive reversals and that led to some upside follow-through for the yield on the 10-year Treasury, and of course the stocks market, which had been getting a little concerned with the continued weakness in yields, celebrated with a big rally when they turned higher on Friday.
The dollar was down for a second straight day but it is now resting on a couple off support levels including the 200-day EMA. There's an open gap below 24.60 so it would have to get back below that 200-day average to fill it.
The technical picture improved on Friday with the indices closing at all time highs, but we still see some resistance in the area and some of the charts may still be overly extended. The small caps and I-fund did pull back more meaningfully recently and may have more room to run, but relative weakness can be a detriment as well.
Seasonality is on the bulls' side this week, but that will change net week.
The S&P 500 (C-fund) popped right back to new highs after the one day pullback on Thursday, which actually turned into a positive reversal day so the bears continue to have little to no influence on this market - at least the large cap indices. The bad news is, overhead resistance is being hit again. The good news, the resistance line is still rising.
The DWCPF (S-fund) led on the upside on Friday after a nasty pullback that lasted a week or two. It happened to close right at the resistance line from the prior highs on Friday, after the failed breakout in June. It looks like a make or break area for small caps.
The EFA / I-fund recovered nicely from Thursday's breakdown. That looked like a possible bear flag being formed, but Friday's action helped. The EFA is also testing that high from back in May again, an area that seems to have some significance on this chart. I believe we need to see more upside here or the bear flag could remain in the picture. Remember, the dollar is sitting on the 200-day EMA and if that bounces back, it could pose some trouble here for the I-fund.
The Dow Transportation Index closed below that key 100-day average on Thursday, but bounced back above it on Friday. It had been trading above that average for months and it has held on each prior test, so this was a significant rebound. However the bear flag may still be in play.
Yields finally bounced and the BND (bonds / F-fund) fell sharply after the 4-day rally put it back up near the February highs. The top of that red rising trading channel could try to hold as support now, and if it does hold, we could have some trouble on our hands for the stock market, which seems to be trying to make sense of why yields had been moving steadily lower in an economic expansion.
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.
