After some morning strength and afternoon weakness, stocks ended the day just about where they started on Monday, and the action was pretty uneventful. The Dow lost 14-points, the S&P was virtually flat, while small caps and the Nasdaq saw minor losses. The dollar rallied causing the I-fund to under-perform.
Daily TSP Funds Return
The 10-Year Treasury Yield inched ever so closer to 3.0% but closed off the high and stocks pretty followed its queue. As the yield neared 3%, stocks moved lower. As it dipped, stocks rebounded, but the yield did end slightly higher at 2.973% so stocks were flat to lower.
After the bell Alphabet (Google to you and me) posted decent earnings but the stock failed to hold an initial after hours rally so it probably won't help the market out today.
Given the quiet day of trading, and again we had the lowest trading volume of the year in S&P stocks, I am going to make this quick and post just the basic charts.
The S&P 500 / C-fund broke below the rising support line but held above the old March / early April peaks. It closed for a 2nd day below the key 50-day EMA, so that's worth keeping an eye on. If this doesn't bounce back soon, the bears may start to get more aggressive as support gives out.
The small caps / S-fund was down slightly and is on day #3 of the pullback after the negative reversal day last Wednesday. It is still above the 50-day EMA so it is holding up a little better technically than the large caps.
The EAFE Index / I-fund was the laggard yesterday because the dollar has finally broken out of its range (see next chart) and unfortunately for the I-fund it was to the upside.
The dollar broke out of its long trading channel, and seems to be trying to fill that large gap left open in mid-January. In the process it has opened two smaller gaps below, but the February and April highs now create some potential support.
The AGG (Bonds / F-fund) moved closer to the lower support line which, if broken, would likely mean 10-year bond yields moved above 3%, and the big question is what the stock market will do if that happens. Obviously the other option is that support holds here on the AGG and the yield pulls back more meaningfully below 3%.
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