It was quite a week for the stocks market last week with mixed inflation data and the Fed not as dovish as investors had hoped, and we saw big gains and pullbacks and wide divergences between the indices. On Friday stocks battled back from early selling to closed mixed, but the ongoing issue with the market is big tech's leadership camouflaging the weakness in some of the broader indices. Bonds were up again as yields continue to slide.
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You don't have to look deep to see the problem as the C-fund (S&P 500) is up 3% this month, while small caps (S-fund) and the overseas markets (I-fund) are down about 2%. The advance / decline numbers illustrate this on Friday as decliners clearly outnumbered the advancers on Friday on both the NYSE and the Nasdaq, yet the S&P 500 was basically flat, and the Nasdaq closed with a gain.
These charts show the different in the large and small cap indices as they have taken different routes to where they are today. The C-fund continues to look quite perky, but perhaps due for some consolidation. On the other hand the S-fund has been consolidating for the last several months. The action in DWCPF (S-fund and 2nd chart below) does not look bad from this longer-term view as it broke above the 1900 area resistance late last year, tested it a couple of times earlier this year, and the old resistance held as support. Now it is hovering somewhere in between that support and another layer of resistance near 2100.
The Russell 2000 (IWM) is not the S-fund but the stocks that make up the S-fund are also in the Russell 2000 so they act similarly. It's not a bad looking chart as long as the layers of support below in the 193 - 200 area can hold.
Here is that S&P 500 Equal Weight chart - same 500 stocks as in the S&P 500 - and it is acting more like the small caps. The red bear flag is a concern, but it did test and hold again at the March low, so it is possibly making an inverted head and shoulders, which is more bullish than a bear flag, so there is a bull / bear battle going on in that 163 area. This is more indicative of the action in the S-fund than the C-fund, despite this being the C-fund stocks.
The 10-year Treasury Yield has been sliding lower on the less inflationary data, but there are also some concerns about economic weakness. It looks to be at an important juncture as it tests the January peak which seemed to be a pivot point a couple of times in between. If we start seeing the yield move below 4.2% (42 on the chart), the F-fund would likely gain momentum. If 4.2% holds, the F-fund would pull back.
The Dow Transportation Index has been a gloomy indicator for months as it hit levels not seen since last November on Friday, but it did rebound and close back above the support line, so it got a bit of a reprieve - at least for a day. Now, can it do something thing with that positive reversal day at its back?
The price of oil has been rallying this month after a two-month decline. There's support just below Friday's lows, but there's also resistance just above Friday's highs, so this could be a telling week. A breakout to the upside would be a good sign for economic condition, but it will also add a burden to consumers who have enjoyed the recent lower prices at the gap pumps.
Holiday Closing this week!
From tsp.gov: ": Some financial markets will be closed on Wednesday, June 19, in observance of Juneteenth National Independence Day. The Thrift Savings Plan will also be closed. Transactions that would have been processed Wednesday night (June 19) will be processed Thursday night (June 20) at Thursday's closing share prices."
The S&P 500 (C-fund) was down on Friday but it was still the second highest close ever for the index. There's an open gap just below with a double dose of potential support at the old breakout line near 5375. There's not a whole lot wrong with this chart except that it arguably needs a little short-term consolidation.
DWCPF (S-fund) blasted higher early last week when the inflation data came in cool and bond yields fell. But since then the rally failed and it could not even hold above the channel it broke out of on Wednesday. There's some support in the 1950 - 1960 area or it could fall and retest the April lows. By the way, the KRE, which is the regional bank ETF and many of those banks are in the DWCPF, is already testing its April lows, and that has been a drag on this fund lately.
The EFA (I-fund) went from the penthouse to the dog house in just a matter of days as the dollar rallied sharply after those European elections. It filled an open gap from early May on Friday and there are now two open gaps above, and one down below 77.
The UUP dollar ETF is sitting on the breakout line with an open gap just below.
BND (bonds / F-fund) moved into an uptrend after clearing more resistance hurdles, and the neckline of the inverted head and shoulders pattern could be an area of support near 72.25.
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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[TR]
[TD="align: center"]
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[TD="width: 283, align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
You don't have to look deep to see the problem as the C-fund (S&P 500) is up 3% this month, while small caps (S-fund) and the overseas markets (I-fund) are down about 2%. The advance / decline numbers illustrate this on Friday as decliners clearly outnumbered the advancers on Friday on both the NYSE and the Nasdaq, yet the S&P 500 was basically flat, and the Nasdaq closed with a gain.
These charts show the different in the large and small cap indices as they have taken different routes to where they are today. The C-fund continues to look quite perky, but perhaps due for some consolidation. On the other hand the S-fund has been consolidating for the last several months. The action in DWCPF (S-fund and 2nd chart below) does not look bad from this longer-term view as it broke above the 1900 area resistance late last year, tested it a couple of times earlier this year, and the old resistance held as support. Now it is hovering somewhere in between that support and another layer of resistance near 2100.
The Russell 2000 (IWM) is not the S-fund but the stocks that make up the S-fund are also in the Russell 2000 so they act similarly. It's not a bad looking chart as long as the layers of support below in the 193 - 200 area can hold.
Here is that S&P 500 Equal Weight chart - same 500 stocks as in the S&P 500 - and it is acting more like the small caps. The red bear flag is a concern, but it did test and hold again at the March low, so it is possibly making an inverted head and shoulders, which is more bullish than a bear flag, so there is a bull / bear battle going on in that 163 area. This is more indicative of the action in the S-fund than the C-fund, despite this being the C-fund stocks.
The 10-year Treasury Yield has been sliding lower on the less inflationary data, but there are also some concerns about economic weakness. It looks to be at an important juncture as it tests the January peak which seemed to be a pivot point a couple of times in between. If we start seeing the yield move below 4.2% (42 on the chart), the F-fund would likely gain momentum. If 4.2% holds, the F-fund would pull back.
The Dow Transportation Index has been a gloomy indicator for months as it hit levels not seen since last November on Friday, but it did rebound and close back above the support line, so it got a bit of a reprieve - at least for a day. Now, can it do something thing with that positive reversal day at its back?
The price of oil has been rallying this month after a two-month decline. There's support just below Friday's lows, but there's also resistance just above Friday's highs, so this could be a telling week. A breakout to the upside would be a good sign for economic condition, but it will also add a burden to consumers who have enjoyed the recent lower prices at the gap pumps.
Holiday Closing this week!
From tsp.gov: ": Some financial markets will be closed on Wednesday, June 19, in observance of Juneteenth National Independence Day. The Thrift Savings Plan will also be closed. Transactions that would have been processed Wednesday night (June 19) will be processed Thursday night (June 20) at Thursday's closing share prices."
The S&P 500 (C-fund) was down on Friday but it was still the second highest close ever for the index. There's an open gap just below with a double dose of potential support at the old breakout line near 5375. There's not a whole lot wrong with this chart except that it arguably needs a little short-term consolidation.
DWCPF (S-fund) blasted higher early last week when the inflation data came in cool and bond yields fell. But since then the rally failed and it could not even hold above the channel it broke out of on Wednesday. There's some support in the 1950 - 1960 area or it could fall and retest the April lows. By the way, the KRE, which is the regional bank ETF and many of those banks are in the DWCPF, is already testing its April lows, and that has been a drag on this fund lately.
The EFA (I-fund) went from the penthouse to the dog house in just a matter of days as the dollar rallied sharply after those European elections. It filled an open gap from early May on Friday and there are now two open gaps above, and one down below 77.
The UUP dollar ETF is sitting on the breakout line with an open gap just below.
BND (bonds / F-fund) moved into an uptrend after clearing more resistance hurdles, and the neckline of the inverted head and shoulders pattern could be an area of support near 72.25.
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.
