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8th day of up / down action in S&P

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Stocks opened lower on Monday morning but stabilized by noon ET when they started to drift higher toward the close ending the day with just modest losses. The Dow was down nearly 100-points early but closed down just 27. The leader was the EFA (I-fund) as the dollar made another lower low, and the laggard was the Transportation Index which lost nearly 1% on the day.

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The choppy, consolidating, sideways, etc., action continued as the S&P 500 put in its 8th consecutive day of alternating between gains and losses. The charts and indicators seem to be coiling up for something. While consolidations in a bull market tend to resolve to the upside, the VIX may be telling us otherwise.

I was actually a little surprised that the market didn't react more, one way or the other, to President Trump's executive order to pull us out of the Trans Pacific Partnership. I guess he said he was going to do it, so money managers were prepared for it.


The SPY (S&P 500 / C-fund) moved below the 20-day EMA and toward the lower end of its trading channel, or "F" flag formation, in early trading before bouncing off that support and closing closer to the middle of the range. It also closed just on top of the rising support line (blue dashed) so no real harm done on the day.




The DWCPF (S-fund) is drifting lower from the highs it has tested three or four times over the last 6-weeks. It closed below the 20-day EMA and while it looks like it is having a difficult time making new highs, the bears have still not been able to do any damage. If the weakness in the dollar continues, it should benefit the smaller stocks over large caps. Not that they have to move up, but could outperform the S&P if the trend in the dollar stays negative.




The Dow Transportation Index lost 0.94% yesterday closing just north of the 20-day EMA and is still within its gradually rising channel, which looks a little more vulnerable with each day it does not break above it.




The EFA (I-fund) led the way on Friday as the weakness in the dollar lent a hand. It is back testing the recent highs after pulling back from the double top last week.




The dollar (UUP) made a lower low yesterday, closing at its lowest point since early December and falling below a rising support line (red dashed). It's trading below the 50-day EMA and this trend is getting stronger while it falls closer to support in the form of an open gap and the 200-day EMA.




The AGG (bonds / F-fund) had a good day although it failed at the 50-day EMA after briefly breaking above it in early trading. It may have been a case of investors jumping into bonds while they were selling stocks in the morning, but the noon reversal in stocks saw money pulling back out of bonds. It remains below the 50-day EMA and the rising support line.





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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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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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