There was a lot of volatility yesterday but the bulls did a good job of pushing the bears off their backs after the early selling. We did see some gains by late afternoon but a weak final 30 minutes of trading pushed the indices into flat, to slightly negative territory by the close. The Dow lost 55-points while the indices tracking the C, S, and I funds were mixed but mostly flat. The I-fund did get an advantage due to weakness in the dollar.
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The S&P 500 (C-fund) made an impressive reversal from a very weak start on Wednesday, but there was some selling late to push the S&P 500 off its afternoon highs, so resistance in the area may be looking to hold. 4500 and 4550 look like the next tests for this rebound. Unfortunately for the bulls, if the index fails there the downside may be too swift to act quickly enough so we are forced to guess, rather than react. The trading range right now is between 4300 and 4600 and I suppose that could go on for a while, unless something happens that triggers the much anticipated test of the January low.
The DWCPF (small caps / S-fund) has formed a small but bullish looking cup and handle type of formation (red) in recent weeks. Unfortunately it is also within a large bear flag (blue) and that 2050 area may be the big test. A break above that area would give the bulls an advantage, but a breakdown at or before that level will get the bears growling again and looking down at those lows.
The EFA (I-fund) managed to push its way through the 200-day EMA yesterday, but the 50-day and the 200-day simple averages are next to be tested, and they have been stubborn in recent weeks. There's an open gap down near 75.50, and we know what that means. (It's a possible pullback target, for those who don't know.)
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 market may have priced in much of the Fed's plan to tighten their monetary policy and because of that perhaps inflationary data may be getting dismissed by some figuring the rate hikes will help. But more recently the market has been on edge while watching the news headlines out of Eastern Europe.
The tension in that region is pushing oil prices up, and since they have been moving up steadily for quite some time, this additional catalyst isn't helping the situation. It seems like such a long time ago, but do you remember the price of oil hit $6 a barrel during the COVID crash just two years ago? It was over $95 on Monday and it closed yesterday near $93.
A weak dollar won't help either as it tends to push commodity prices higher as well.
The 10-year Treasury Yield was up just 0.10% yesterday, but that was enough for a new closing high.
The seasonality charts haven't been a great help for market timers over the last several months, but I did want to remind you of the dramatic shift in bias that we get after options expiration week, which we are in right now. The bulls do tend to have the advantage this week, but be careful next week.
Chart provided courtesy of www.sentimentrader.com
The bulls are showing some resilience but the charts are not in the best of shape, and I think next week will be a big test for the market, once we get past options expiration week.
Monday is a holiday so that is also part of the equation and the tendency for pre / post holiday reversals are certainly on my radar.
Holiday closing alert from tsp.gov: "Some financial markets will be closed on Monday, February 21 in observance of the Washington's Birthday holiday. The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (February 21) will be processed Tuesday night (February 22), at Tuesday's closing share prices."
The tension in that region is pushing oil prices up, and since they have been moving up steadily for quite some time, this additional catalyst isn't helping the situation. It seems like such a long time ago, but do you remember the price of oil hit $6 a barrel during the COVID crash just two years ago? It was over $95 on Monday and it closed yesterday near $93.
A weak dollar won't help either as it tends to push commodity prices higher as well.
The 10-year Treasury Yield was up just 0.10% yesterday, but that was enough for a new closing high.
The seasonality charts haven't been a great help for market timers over the last several months, but I did want to remind you of the dramatic shift in bias that we get after options expiration week, which we are in right now. The bulls do tend to have the advantage this week, but be careful next week.
Chart provided courtesy of www.sentimentrader.com
The bulls are showing some resilience but the charts are not in the best of shape, and I think next week will be a big test for the market, once we get past options expiration week.
Monday is a holiday so that is also part of the equation and the tendency for pre / post holiday reversals are certainly on my radar.
Holiday closing alert from tsp.gov: "Some financial markets will be closed on Monday, February 21 in observance of the Washington's Birthday holiday. The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (February 21) will be processed Tuesday night (February 22), at Tuesday's closing share prices."
The S&P 500 (C-fund) made an impressive reversal from a very weak start on Wednesday, but there was some selling late to push the S&P 500 off its afternoon highs, so resistance in the area may be looking to hold. 4500 and 4550 look like the next tests for this rebound. Unfortunately for the bulls, if the index fails there the downside may be too swift to act quickly enough so we are forced to guess, rather than react. The trading range right now is between 4300 and 4600 and I suppose that could go on for a while, unless something happens that triggers the much anticipated test of the January low.
The DWCPF (small caps / S-fund) has formed a small but bullish looking cup and handle type of formation (red) in recent weeks. Unfortunately it is also within a large bear flag (blue) and that 2050 area may be the big test. A break above that area would give the bulls an advantage, but a breakdown at or before that level will get the bears growling again and looking down at those lows.
The EFA (I-fund) managed to push its way through the 200-day EMA yesterday, but the 50-day and the 200-day simple averages are next to be tested, and they have been stubborn in recent weeks. There's an open gap down near 75.50, and we know what that means. (It's a possible pullback target, for those who don't know.)
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Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
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.
