Stocks moved higher on Monday after a sharply lower open. It was a tale of two half days yesterday as we saw the Dow futures down about 200-points near the open, and we retested those lows in early afternoon trading before the bulls stepped up and rallied the indices into the close. The Dow ended the day up 36-points, or 0.15%, while the broader indices saw larger gains.
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It probably couldn't have played out any better for market analysts, at least the way we saw it. With Friday's big negative reversal, getting early downward momentum would be what we'd expect early on Monday, and that's what we got. But it is a holiday week and and we anticipated that bears and day traders tend to take these types of days off so trading volume lightened up giving the bulls an edge and allowing them to take charge for a few days. I'll post the Independence Day and July seasonality charts again...
Chart provided courtesy of www.sentimentrader.com
Chart provided courtesy of www.sentimentrader.com
July's positive seasonal advantage usually lasts until the 2nd quarter earnings start to roll out in the middle of the month.
We get the June Jobs Report this coming Friday and estimates are looking for a gain of 195,000 jobs and an unemployment rate of 3.8%.
The S&P 500 / C-fund rallied off of the early decline on Monday and as of now it appears to be trying to carve out a low. The current action could be forming a bear flag but it also looks very similar to the low made in April, as opposed to the two "V" bottoms we saw in between the two. The S&P closed just north of the 50-day EMA yesterday. There is an open gap near 2750 and with seasonality on the bulls' side for the next couple of weeks, there's a very good chance that they will get that filled.
The small caps (S-fund) are also trying to make a low and the formation also looks like it could be a bear flag forming, but we saw similar action off of the prior pullback lows. It has now closed above the 50-day EMA for three straight days after that one close below it last week.
The Dow Jones Transportation Index had a big day gaining 1% and pushing back above the key 200-day EMA. The low looks similar to the lows in April and May so should we expect anything different this time? I don't know if it can run to new highs, but a move to the 50-day EMA seems likely.
The EAFE Index (I-fund) lagged again and some of that has to do with the overseas market timing again. There are a slew of open gaps above on this chart that we have to wonder how long they can stay open. Surely the two nearest gaps, which are below the 200-day EMA, can get filled even on any dead-cat bounce here.
The financials caught a bid, and as we speculated yesterday, we could see some bargain hunting in these beaten down stocks this first week of the new quarter.
The AGG (Bonds / F-fund) again stalled at the 200-day EMA and I would think that open gap near 105.80 is just too much of an lure to see a breakout before that gap gets filled.
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
Thanks for reading. Happy Independence Day, and enjoy your day off! We'll see you back here on Thursday.
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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It probably couldn't have played out any better for market analysts, at least the way we saw it. With Friday's big negative reversal, getting early downward momentum would be what we'd expect early on Monday, and that's what we got. But it is a holiday week and and we anticipated that bears and day traders tend to take these types of days off so trading volume lightened up giving the bulls an edge and allowing them to take charge for a few days. I'll post the Independence Day and July seasonality charts again...
Chart provided courtesy of www.sentimentrader.com
Chart provided courtesy of www.sentimentrader.com
July's positive seasonal advantage usually lasts until the 2nd quarter earnings start to roll out in the middle of the month.
We get the June Jobs Report this coming Friday and estimates are looking for a gain of 195,000 jobs and an unemployment rate of 3.8%.
The S&P 500 / C-fund rallied off of the early decline on Monday and as of now it appears to be trying to carve out a low. The current action could be forming a bear flag but it also looks very similar to the low made in April, as opposed to the two "V" bottoms we saw in between the two. The S&P closed just north of the 50-day EMA yesterday. There is an open gap near 2750 and with seasonality on the bulls' side for the next couple of weeks, there's a very good chance that they will get that filled.
The small caps (S-fund) are also trying to make a low and the formation also looks like it could be a bear flag forming, but we saw similar action off of the prior pullback lows. It has now closed above the 50-day EMA for three straight days after that one close below it last week.
The Dow Jones Transportation Index had a big day gaining 1% and pushing back above the key 200-day EMA. The low looks similar to the lows in April and May so should we expect anything different this time? I don't know if it can run to new highs, but a move to the 50-day EMA seems likely.
The EAFE Index (I-fund) lagged again and some of that has to do with the overseas market timing again. There are a slew of open gaps above on this chart that we have to wonder how long they can stay open. Surely the two nearest gaps, which are below the 200-day EMA, can get filled even on any dead-cat bounce here.
The financials caught a bid, and as we speculated yesterday, we could see some bargain hunting in these beaten down stocks this first week of the new quarter.
The AGG (Bonds / F-fund) again stalled at the 200-day EMA and I would think that open gap near 105.80 is just too much of an lure to see a breakout before that gap gets filled.
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
Thanks for reading. Happy Independence Day, and enjoy your day off! We'll see you back here on Thursday.
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.
