Turnaround Tuesday was a true V-day where stocks opened near their highs, fell to the lows, and closed near the highs again. The Dow ended the day up 89-points, but that doesn't tell the whole story. From low to the close it gained 199-points and for the second straight day stocks rallied into the close.
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The I-fund lagged with the late rally in the U.S., but also the German DAX was hit hard yesterday bringing down EAFE Index which our I-fund tracks. Bonds posted a small gain but finished well off their highs.
The SPY (S&P 500 / C-fund) rebounded sharply from the intraday lows yesterday, and closed strongly, but it stopped at the 50-day EMA. It is still in a new short-term downtrend below the 50-day EMA, so there's a little work to be done. Perhaps the Beige Book and Janet Yellen can break this new trend.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq was hurting yesterday at the lows, but it found support at the 200-day EMA and exploded into the close. There's no denying that this is getting to be an ugly chart, but we've seen many pullbacks end at a major EMA, and in a bull market you'd expect the 200-day EMA to hold.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The long-term chart shows just how bad this recent pullback has been and that the current bull market has remained above the 200-day EMA since 2012. It's not official, but the 9.7% decline from the March highs to yesterday's low is enough for me to consider it a correction. 10% would be the official number. How clean would it be if the rally resumed from here? That may be too much to ask, but I wouldn't be surprised if we get a decent rebound before going lower.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Seasonality surrounding Good Friday is quite positive except for next Monday. Yesterday was day -3 and so far so good.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
Bonds have come to life and both of these ETFs are now above their trading range resistance line, although when stocks reversed they did close off their highs.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
This might be the tell. The yield on the 10-year Treasury had fallen back below the 200-day EMA but moved up sharply when stocks rallied, and closed back above it. These kind of intraday reversals that we saw all over the charts yesterday tend to be short-term direction changers. We'll see.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
From www.tsp.gov: Some financial markets will be closed Friday, April 18th. Consequently, the Thrift Savings Plan will not be updating share prices in any of the TSP funds for that day. Transactions that would have been processed Friday night (April 18th) will be processed Monday night (April 21st), at Monday's closing share prices.
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Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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