I'm thinking that with today's big gain, tomorrow is going to give some of that back. Can you say Turn-Around-Tuesday.
The real question is what happens after that for the rest of the week.
I'm actually thinking of reducing my I fund exposure. It's overbought via the RSI being over 70. If it closes there I might sell some of my 100%
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RSI - Relative Strength Indicator DMA - day moving average
I'm thinking that with today's big gain, tomorrow is going to give some of that back. Can you say Turn-Around-Tuesday.
The real question is what happens after that for the rest of the week.
Allocations as of COB Dec 28 : 100% S. | Retirement Date:Dec 2025
Past Returns: 2020 31.85%,2019 27.97%,2018 -3.36%,2017 13.10%, 2016 -1.79%, 5Yr Avg 12.61%
Once again, political events are driving market prices and action as Monday closes out with big gains, but perhaps more importantly, with decisive breaks of resistance.
S&P 500.png
Every TSP stock chart has a big gap on it today. There was more volume to the move, which is bullish. Momentum turned up big too. I am not so sure we're going to see a pullback of any import right away, though some weakness could certainly manifest in the very short term.
DWCPF.png
Similar story on the DWCPF.
EFA.png
The chart of the EFA is darn bullish. That gap was huge, which doesn't make me inclined to want to buy it, but look at the chart! Volume...up. Strength and momentum...up. The 50 dma has not been broken in months. Yes, RSI is now overbought, but overbought can get a lot more overbought.
Banks rallied, which is bullish, though the BKX is still not out of the woods. More importantly, breadth and liquidity remain solidly in the bull's favor.
I was tempted to pull something off the table today, but then I thought better of it as some indicators are just now starting to flip bullish. I also wasn't so sure early gains would stick, so I stayed the course. I am not concerned with short-term weakness. Many missed today's move because the market was struggling for some time. Now, many will be disinclined to buy this market because they won't believe their eyes (it's that "deer-in-headlight" thing). Sentiment got less bullish last week, but I said that although the surveys are largely neutral, they are still supportive. NAAIM is still largely bullish. The dollar is testing its 200 dma, which is bullish for exports.
So what's the next bogeyman to scare folks out of the market? The debt ceiling? WWIII? It's just one thing after another, isn't it?
"the biggest mistake that traders make is to let these short-term trades turn into longer-term investments when they don’t work." RevShark
Generally speaking, when a market takes off the way this one did yesterday and then tacks on another gap up rally the next day, it's bullish and should not be fought.
I think that applies right now. If you're long, I think you may want to exercise some patience, and that's not easy if you have bagged big gains of late. The market is telling us something. And if you're a bear, be real careful right now. Long is the way to be for the time being.
S&P 500.png
Those gaps may eventually get filled, but it can sometimes be weeks and months before they do. This market does not appear to be inclined to take much profit right now. Momentum is still rising.
DWCPF.png
The bears will point to a potential double top on the DWCPF, but the S&P 500 has not hit one and it likely will before there is any chance of a pullback, but even then this market may be gunning for much higher highs, so we need to be open to that.
EFA.png
Another fresh high on the EFA. Volume remains elevated and RSI is move overbought.
BKX.png
Interesting that the BKX tested its last peak and fell back. The 50 dma has still not been tested. Momentum is still rising.
My indicators have not changed. Cumulative breadth is ramping higher as is liquidity. That combination typically means a rally has legs.I'm wondering how the market will react when a Government shutdown is averted, which they are alluding will happen. Or some other piece of news that's used to justify higher prices. That's where I think this is going.
The options market has been neutral of late. Not sure what it will read this evening yet as the charts are not settled.
The main bit of news that seems to have caught the market's attention is Trump's tax plan, which when unveiled this afternoon, caused some degree of profit taking into the close. It wasn't a big up-day for much of the market early on, though the DWCPF saw some nice gains intraday, but by the close it only held onto a portion of them.
S&P 500.png
The S&P tried to stretch to its peak high from almost 2 months ago on Wednesday, but came up just short and closed for a modest loss. Double top in play?
DWCPF.png
The DWCPF hit a fresh high, but as you can see from today's candlestick, it gave back a good portion of its intra-day gains. Momentum is still on the upswing, but strength tapered off.
EFA.png
The EFA saw a small loss on the day as volume fell off.
BKX.png
The Bank Index tested its 50 dma on Wednesday, but could not push past it. Still, it closed for a small gain.
My outlook has not changed (it's still bullish). The market may be poised for some "give-back", but breadth and liquidity are too bullish to ignore. The options were neutral last night, as they have been for a few days now. Of note, TRINQ closed at a somewhat high level. That's bullish for the NAZ on Thursday from a contrarian standpoint.
NAAIM reports Thursday morning.
The options smart money is leaning bearish for Thursday, so the bears do have some support to look lower, but I am not inclined to look for a ton of selling pressure in spite of recent gaps. Liquidity is too strong to get overly bearish.
As I said yesterday, in spite of the options smart money leaning bearish, liquidity is too elevated to get particularly bearish. The best the market could do for the bears was close largely flat. I'm not surprised.
We could still see some selling and we will eventually, but the trend is up and the current move higher could continue to surprise many. I'm not saying it will, but I think there's a good chance the bulls remain in charge for a bit yet.
No charts this evening. There wasn't enough change to bother.
Futures are probably going to rise this evening. Google and Amazon beat estimates. That may be a reason to continue punishing the bears. We'll see.
Quick update on sentiment. The options smart money is wildly bearish for Friday, but NAAIM came in more bullish. The options are daily reads. NAAIM is days or weeks. We could see some selling Friday, but it's very likely temporary if we get it.
So, Congress has agreed to fund the Government through September and Trump is contemplating breaking up the big banks. Those were the bigger stories of the day, though I should also mention that earnings continues to impress.
DWCPF.png
Just one chart this evening. The DWCPF bounced, coming close to retesting that upper line of resistance that was broken for only a very short time.
For Tuesday, the options look to be on the bullish side. Breadth and liquidity also remain bullish (of course). I started the week bullish and that sentiment has not changed. With the averages close to historic highs, I expect another run to the upside eventually.
Somewhat boring day in the market on Tuesday. Price traded in a relatively tight range with the averages closing mixed by the close.
S&P 500.png
The S&P 500 eked out a small gain on decent volume, but momentum is still weak and strength flat. I seriously doubt the puppet masters are going to let that line of resistance stand unbroken. However, there are gaps below that could still get filled (at least partially) before another run to the upside.
DWCPF.png
The S fund gave back the bulk of Monday's gains on Tuesday. Momentum is also weakening. We could see at least a partial gap fill here too.
EFA.png
Anyone still doubt the EFA's ability to levitate?
The options smart money is leaning heavily bearish for Wednesday. They aren't always right, but they sure are leaning hard and that makes me lean toward weakness for Wednesday. However, the market needs to reload after the last rally if it's going to make another run to a fresh high so we sometimes have to take the draw downs in stride. As far as any downside goes, I see it as a buying opportunity if we get it. Breadth is flat, but positive as is liquidity. My intermediate term system remains solidly positive.
What's the likelihood that the FOMC announcement has an impact on the markets tomorrow afternoon?
S&P500 (C Fund) (delayed) (Stockcharts.com Real-time) |
DWCPF (S Fund) (delayed) (Stockcharts.com Real-time) |
EFA (I Fund) (delayed) (Stockcharts.com Real-time) |
BND (F Fund) (delayed) (Stockcharts.com Real-time) |
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