A late rally pushed the Dow and S&P 500 back into positive after they had both given up some solid early gains and moved into negative territory. The Dow ended the day up 39.00 points and it was the Nasdaq and small caps leading on the upside, while we saw some negative reversal patterns on a couple of charts - particularly the Transportation Index. Bond yields bounced back as the F-fund lagged.
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We get the March Jobs report tomorrow morning and estimates are looking for a gain of 170,000 jobs, an unemployment rate of 3.8%, and wage growth at +0.2%. It may be that the market is in a no lose situation, but there could also be some reverse psychology involved.
If the jobs number comes in "hot" it will be a good thing since no one is concerned anymore about the Fed raising rates. But if it's another dud like last month, we'll hear more about the need for a rate cut. It seems like a win, win, but that could be what this recent rally is all about, and we may end up getting a "sell the news" reaction. That's the reverse psychology I'm talking about.
Again earnings season is nearing and expectations are low, but it's all about hitting and missing estimates, and more importantly, company guidance for future quarters.
With yields rising yesterday, the Fed out of the way, low expectations for earnings, and a possible trade deal coming, everything is coming up rosy for stocks, right? Well, be careful! The indices are nearing their old highs and when stocks run a long way on news that has been a round for a long time, the market can do what it likes to do most - fool us and do the opposite of what most expect. I certainly didn't expect a rally off the December lows to be this strong. Nor did many others. And now that the market has pulled a lot of folks into the bullish corner, you may want to start considering the unexpected.
The S&P 500 (C-fund) was up modestly after almost posting a negative reversal day. It was saved by a late push higher into the close and ended the day with another one of those spinning top candlestick formations that tends to be a sign of indecision - and can also be a turning point - at least for a short-term dip.
I have some interesting chart comparisons to show TSP Talk Plus subscribers so subscribers, be sure to check them out.
The yield on the 10-year was probably the main catalyst yesterday as it not only "un-inverted" recently, but yesterday's move pushed it above the open gap and the descending resistance line we talked about yesterday, which is a bit of a surprise to me. Watch the 2.55% area which is the prior low from early January, and where it broke down from in March.
The DWCPF (S-fund) gapped up on the day and I noticed that it had done a better job than the S&P 500 chart of forming that right shoulder on the inverted head and shoulders pattern. That could mean it has more staying power. But the issue is whether it needs to pullback and test the head again, as we have seen many times on head and shoulders patterns.
The Dow Transportation Index was up sharply in early trading but stalled with the rest of the market, and this one actually did create a fairly clear negative reversal pattern right at the prior peak. How deep any dip will be from here remains to be seen, but a test of the 200-day EMA, where there is also a small open gap, might be a good guess.
The AGG (F-fund) dropped again as bonds come off their recent highs. The open gap is still right there for the taking on this pullback, and the top of that channel would be the next level of potential support.
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. 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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We get the March Jobs report tomorrow morning and estimates are looking for a gain of 170,000 jobs, an unemployment rate of 3.8%, and wage growth at +0.2%. It may be that the market is in a no lose situation, but there could also be some reverse psychology involved.
If the jobs number comes in "hot" it will be a good thing since no one is concerned anymore about the Fed raising rates. But if it's another dud like last month, we'll hear more about the need for a rate cut. It seems like a win, win, but that could be what this recent rally is all about, and we may end up getting a "sell the news" reaction. That's the reverse psychology I'm talking about.
Again earnings season is nearing and expectations are low, but it's all about hitting and missing estimates, and more importantly, company guidance for future quarters.
With yields rising yesterday, the Fed out of the way, low expectations for earnings, and a possible trade deal coming, everything is coming up rosy for stocks, right? Well, be careful! The indices are nearing their old highs and when stocks run a long way on news that has been a round for a long time, the market can do what it likes to do most - fool us and do the opposite of what most expect. I certainly didn't expect a rally off the December lows to be this strong. Nor did many others. And now that the market has pulled a lot of folks into the bullish corner, you may want to start considering the unexpected.
The S&P 500 (C-fund) was up modestly after almost posting a negative reversal day. It was saved by a late push higher into the close and ended the day with another one of those spinning top candlestick formations that tends to be a sign of indecision - and can also be a turning point - at least for a short-term dip.
I have some interesting chart comparisons to show TSP Talk Plus subscribers so subscribers, be sure to check them out.
The yield on the 10-year was probably the main catalyst yesterday as it not only "un-inverted" recently, but yesterday's move pushed it above the open gap and the descending resistance line we talked about yesterday, which is a bit of a surprise to me. Watch the 2.55% area which is the prior low from early January, and where it broke down from in March.
The DWCPF (S-fund) gapped up on the day and I noticed that it had done a better job than the S&P 500 chart of forming that right shoulder on the inverted head and shoulders pattern. That could mean it has more staying power. But the issue is whether it needs to pullback and test the head again, as we have seen many times on head and shoulders patterns.
The Dow Transportation Index was up sharply in early trading but stalled with the rest of the market, and this one actually did create a fairly clear negative reversal pattern right at the prior peak. How deep any dip will be from here remains to be seen, but a test of the 200-day EMA, where there is also a small open gap, might be a good guess.
The AGG (F-fund) dropped again as bonds come off their recent highs. The open gap is still right there for the taking on this pullback, and the top of that channel would be the next level of potential support.
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. 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.
