Seasonality issues in late March?
by, 03-20-2017 at 01:27 AM (364 Views)
Stocks were mostly flat again on Friday as volatility has been low and trading ranges tight lately. The Dow lost just 20-points but because of the weak close, it felt technically worse than it was as you can see in the Friday intraday charts below. The small caps and International stocks held onto gains while the S&P slipped a few points.
Daily TSP Funds Return
The second half of March isn't as strong historically as the first half, as you can see in this chart. It's useful information but we don't use seasonality as a primary indicator.
Chart provided courtesy of www.sentimentrader.com
We've seen that "things seem different this time" - something that is rarely a useful phrase, but since the election, there has certainly been something different going on. But can it continue?
The SPY (S&P 500 / C-fund) slipped on Friday and continues to trade above the 20-day EMA. The minor pullbacks on Thursday and Friday could potentially be a small bull flag, but if it doesn't break to the upside, the S&P risks making a lower high.
The DWCPF (S-fund) posted a small gain despite the late selling on Friday, and technically there is some resistance at 1210, but the 50-day EMA has held so far and that's a good sign for the bull market. there is a small open gap near 1185 that's always a concern because it has us looking over our shoulders as a possible downside target, but otherwise the trend is still up.
The Transportation Index has been lagging lately, and that's not a good sign from the market leader. We saw a similar decline in December that eventually recovered before any more damage was done, but let's keep an eye on that support line near 9150 now that the 50-day EMA has been compromised.
The price of oil has been back in the headlines since it started to pull back from recent highs earlier this month. It's back above the 200-day EMA and that's probably where it needs to stay if the bull market is going to continue to chug along.
The EFA (I-fund) was up again on Friday and has been outperforming U.S. stocks thanks to a pullback in the dollar.
The AGG (bonds / F-fund) rallied on Friday and has shown some life since the Fed raised rates. That large open gap still looms near 108.6, but it will have to get back above the 50-day and 200-day EMAs to fill it.
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