Wash, rinse, repeat. That is what we continue to see of late with stocks opening lower on the day, and by the close much of the damage is repaired. The Dow did lose 287-points and was the percentage laggard, but it did close off it's -419 lows. The Dow has been down for six straight days and is now negative for 2018.
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Meanwhile, the Russell 2000 closed up a point and small caps have basically come away unscathed from the ongoing trade talks that are hitting the large caps. Our S-fund isn't all small caps. It also contains mid-cap sized stocks which didn't hold up quite as well, but still better than the S&P 500.
The international stocks have also lagged from a combination of the trade talks, the recent strength in the dollar, and of course overseas economies not performing at the same level as the U.S. economy.
I've posted this chart of China's Shanghai Index a few times this year as it flirted with breakdowns, but yesterday it finally gave-way. This is what a head and shoulders pattern breakdown pattern looks like...
As I've mentioned before, China is not a part of our I-fund but it obviously has a global impact. And the I-fund chart (the EAFE Index) looks similar, although not as dramatic yet, as does the financial sector chart which is still above support, but the H&S pattern is there.
Reminder: I apologize, but I'm going to be in and out of the office over the next couple of weeks [starting 6/7], doing some traveling. I will be checking emails and posting premium alerts as usual, and I will posting something here everyday, but it may be quick updates and my timeframes may be off a little. The AutoTracker may also be updated later than normal.
The S&P 500 / C-fund was down 0.40% but again it closed well off the lows. It found some decent support at the prior highs and the bottom of the rising wedge, but rising wedges tend to break to the downside, so be careful. The action has been interesting. Look at the recent white candlesticks on all three of the last down days for the the index. That means the index closed higher than it opened, even though it closed down on the day.
The small caps (S-fund) are hanging very tough as they have become the darlings of the trade fears. There is still some resistance overhead and the chart is extended so we'll see if upside momentum can win out, or if this chart wants to fill that vacuum below.
The Dow Jones Transportation has made a couple of false breakdowns from that "F" flag formation this month, and early yesterday it looked like it was going to be the real deal, but no. It closed just barely back in the flag. F-flags tend to eventually break down.
The EAFE Index (I-fund) fell below its neckline of the head and shoulders pattern for a technical breakdown intraday on Tuesday, but it managed to close just barely above it.
The AGG (Bonds /F-fund) was up moderately on Tuesday and this chart of the 10-year Treasury Yield shows that there "could" be some support here for yields after filling that open gap near 28.75. That could make bonds and the F-fund a little heavy, but I say this based on a filled gap theory, not the fundamentals.
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Thanks for reading, and thanks for your patience over the time I am out and about.
We'll see you tomorrow.
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