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Rate hike triggers rally

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It was a nice day for stocks as the Fed didn't give us any surprises. We got the 25 basis point rate hike as expected and Janet Yellen didn't give any indication of a regular schedule of hikes. They will raise rates as needed. After a little typical post-Fed back and forth action, although it was relative tame, stocks settled on the upside and the Dow gained 224-points.

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There is some risk of profit taking after 3 big days for stocks, but seasonality is getting more positive so perhaps the bulls will remain in charge.

The SPY (S&P 500 / C-Fund) broke above the key 50-day EMA and now has the job of making a higher high. The action looks good, but if we don't see the S&P take out the November and early December highs, this would get ugly in a hurry. Perhaps the rate hike being out of the way and the bullish seasonality will be enough for us to see those new highs.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk


The Dow Completion Index (small caps / S-Fund) is still below key resistance in the form of the 50 and 200-day EMA's and lags the large caps, but it had a big day on Wednesday and broke above the short-term descending trading channel. 1033 looks key here.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk


The Dow Transportation Index also broke its downtrend with a +1.8% gain Wednesday, but it is closer to new lows than the 50-day EMA. Still in a bear market, it could be bottoming, but we still have to be leery.



Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk

The price of oil was down again and stocks were losing some big early gains as oil pulled back before the Fed announced the rate hike. This may still be the chart to watch unless the Fed's action gave us another catalyst to take investor's attention away from oil.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk


The EFA (EAFE Index / I-Fund) rallied 2% filling one gap (blue) and opening another small gap below 59. It is also close to closing the larger open gap near 60.25. The 50-day EMA as at the top of that gap so that will be some tough resistance to try to get through.



Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk


The HYG High Yield Bond Fund rallied and is trying to make a bottom. Keep an eye on this. Once those overhead gaps get filled it could interesting. If the bull market in stocks is going to resume, this needs to get back above the resistance.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk


The AGG (Bonds / F-Fund) were down on the busy Fed day. It fell back below the 200-day EMA and is nearing some important support.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk



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Thanks for reading. We'll see you back here tomorrow.

Tom Crowley


Posted daily at www.tsptalk.com/comments.php

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Comments

  1. Bquat's Avatar
    Do you have anything on today's action?

S&P500 (C Fund) (delayed)

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EFA (I Fund) (delayed)

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BND (F Fund) (delayed)

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