Bond yields were mostly higher yesterday, as were stocks. Thanks. Have a great weekend! 
That's all we need to know right now. The yield on the 10-year Treasury was up 0.63%, and the S&P 500 gained 0.36% as the correlation continues. The Dow added a solid 92-points and the action has been similar in recent days - a morning rally that gets sold, then the dip buys show up and grind out a move higher into the close. This has happened whether stocks closed higher or lower on the day.
[TABLE="align: center"]
[TR]
[TD="align: center"] Daily TSP Funds Return
[TABLE="align: center"]
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[TD][/TD]
[TD="align: center"]
[/TD]
[/TR]
[/TABLE]
Except for one day, the S&P 500 has closed between 2798 and 2833 for the last 12 trading days so it has been kind of a slog. While the decline in yields recently has been a drag on the stock market, the indices are still hanging around, remaining in that tight range. But we got a rare rally in the 10-year yield (bond prices down) on Thursday, and stocks responded positively.
Yesterday's action saw the the short-term 3-month yield moved lower while the 10-year moved higher, and that helped move the yield curve slightly higher, but it is still inverted (below 0.)
Again, that is the current game. Maybe we'll get some news on a trade deal, or earnings warnings, etc., but like we have seen with other assets in the past like the price of oil at times, or gold, or the dollar, right now everyone is watching bond yields and the yield curve, and the market is reacting to it. And small caps have been the most responsive to these moves in yields. Program traders are likely all over this.
Eventually earnings will be back in the spotlight, but we're still 2 - 3 weeks away from major reports.
The S&P 500 (C-fund) has been hovering in the same area for almost three weeks now. We know that 2815 area seems to be a pivot point, and where did the index close yesterday? 2815. But as I have been saying, it's that 2800 to 2820 (even 2830) range that has held, and whether the bulls can push it above that range, or the bears can pull it below, is the big question.
The DWCPF (S-fund) also has a small bear flag on it despite some nice days recently. It really needs to make some headway above 1400 or else it risks creating a large rounded top, so keep an eye on that level, and 1345 where there is some important resistance with little support beneath it should it break down.
The Dow Transportation Index chart looks a lot like that small caps chart above. It could be a big bull flag so watch those support and resistance lines. It stalled at the 200-day EMA yesterday, and although it's not shown, the 200-day simple average is currently up at 10,509.
The Financials had a big day yesterday leading on the upside, but that's a clear bear flag. The question is whether bears flags are doing what they normally do right now - which is eventually break down.
The EFA (I-fund) was down yesterday and a lot of that had to do with what's happening with the dollar, which closed at its second highest level of the year yesterday.
The AGG was flat but longer-term yields were up while that shorter 90-day yield was down so there were mixed results. The F-fund was down with that rally in 10-year yields.
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. Have a great weekend!
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.
That's all we need to know right now. The yield on the 10-year Treasury was up 0.63%, and the S&P 500 gained 0.36% as the correlation continues. The Dow added a solid 92-points and the action has been similar in recent days - a morning rally that gets sold, then the dip buys show up and grind out a move higher into the close. This has happened whether stocks closed higher or lower on the day.
[TABLE="align: center"]
[TR]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[TD][/TD]
[TD="align: center"]
[/TR]
[/TABLE]
Except for one day, the S&P 500 has closed between 2798 and 2833 for the last 12 trading days so it has been kind of a slog. While the decline in yields recently has been a drag on the stock market, the indices are still hanging around, remaining in that tight range. But we got a rare rally in the 10-year yield (bond prices down) on Thursday, and stocks responded positively.
Yesterday's action saw the the short-term 3-month yield moved lower while the 10-year moved higher, and that helped move the yield curve slightly higher, but it is still inverted (below 0.)
Again, that is the current game. Maybe we'll get some news on a trade deal, or earnings warnings, etc., but like we have seen with other assets in the past like the price of oil at times, or gold, or the dollar, right now everyone is watching bond yields and the yield curve, and the market is reacting to it. And small caps have been the most responsive to these moves in yields. Program traders are likely all over this.
Eventually earnings will be back in the spotlight, but we're still 2 - 3 weeks away from major reports.
The S&P 500 (C-fund) has been hovering in the same area for almost three weeks now. We know that 2815 area seems to be a pivot point, and where did the index close yesterday? 2815. But as I have been saying, it's that 2800 to 2820 (even 2830) range that has held, and whether the bulls can push it above that range, or the bears can pull it below, is the big question.
The DWCPF (S-fund) also has a small bear flag on it despite some nice days recently. It really needs to make some headway above 1400 or else it risks creating a large rounded top, so keep an eye on that level, and 1345 where there is some important resistance with little support beneath it should it break down.
The Dow Transportation Index chart looks a lot like that small caps chart above. It could be a big bull flag so watch those support and resistance lines. It stalled at the 200-day EMA yesterday, and although it's not shown, the 200-day simple average is currently up at 10,509.
The Financials had a big day yesterday leading on the upside, but that's a clear bear flag. The question is whether bears flags are doing what they normally do right now - which is eventually break down.
The EFA (I-fund) was down yesterday and a lot of that had to do with what's happening with the dollar, which closed at its second highest level of the year yesterday.
The AGG was flat but longer-term yields were up while that shorter 90-day yield was down so there were mixed results. The F-fund was down with that rally in 10-year yields.
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. Have a great weekend!
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.
