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Bears put on pressure. Can the banks assist?

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The market has been hanging tough lately despite the constant political and geopolitical wrangling going on, but yesterday there was a little more head shaking and maybe some frustration from the bulls. We did see a little push off the early lows, but the bears won this battle. The Dow lost 59-points while small caps and the Transports were hit hard.

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After the meeting with Russia yesterday, and some comments from Trump about the dollar being too strong, and mentioning Janet Yellen, investors didn't seem to have the will to buy the dip for the first time in a couple of weeks. Wall Street has been hanging on every word out of Washington and more recently the word has not been all that friendly toward stocks. They didn't behave all that badly although the small caps and Transports may disagree.

All eyes will turn the financials as banks will start reporting earnings today and that could make or break this market. The decline in yields recently gives us some concern about earnings potential, but "the word" on the Street is that banks will surprise on the upside. That means expectations may already be too high, so we'll see.

The fact that there was a little capitulation from the bulls yesterday could be a good sign. It wasn't a bear market type capitulation, but those uneasy about stocks are feeling the pressure, and sometimes we get a bounce off of that kind of pessimism. The bears have been repeatedly beaten down since the election so they may not have the fortitude to stick around too long.

This a repeat from Wednesday ... Friday is not a federal holiday but it is Good Friday and the stock market and TSP will be closed so we will take the day off. This chart is on the old side but it shows that just before and after the holiday weekend that stocks tend to do well.



Per www.tsp.gov: "Some financial markets will be closed on Friday, April 14th in observance of Good Friday. Consequently, the Thrift Savings Plan will not be updating share prices in any of the TSP funds for that day. Transactions that would have been processed Friday night (April 14th) will be processed Monday night (April 17th), at Monday's closing share prices."


The SPY (S&P 500 / C-fund) was down and it was not a great day as the bulls didn't show up. The rising support line is still holding and it remains above the 50-day EMA for now, but it actually closed below the 50-day Simple MA, (not shown) and that will get traders' attention, so the bulls still have the ball in their court, but they are feeling the pressure. If the banks can give the market a spark, a move back to the top of the wedge may be possible. Of course if they don't, there's not a lot of support below 233.




The DWCPF (S-fund) was hit hard on Wednesday giving back all of Tuesday's gains, plus some. You can see on the chart that it is in a very vulnerable position with 1185 looking like a must hold level.




FedEx was down 3.5% yesterday taking the Dow Transportation Index down with it and both the "F" flag (blue) and the bull flag (red) gave way. The 50-day EMA held as resistance and now this chart is back in some trouble.




The EFA (I-fund) held up well thanks to President Trump's comments about the dollar being too strong.




The dollar fell sharply on those comments, and as if the chart knew it was coming, the overhead descending resistance line held.




The AGG (Bonds / F-fund) rallied again, and moved above that resistance line after the dollar comments from Trump. It feels like this rally in bonds is very much a result of the geopolitical environment, and not much to with the economy. That means it could snap back down once all of this blows over... assuming it does?




Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php

Thanks for reading. With the market and TSP holiday on Friday we'll be back on Monday.

Tom Crowley


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

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S&P500 (C Fund) (delayed)

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DWCPF (S Fund) (delayed)

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EFA (I Fund) (delayed)

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BND (F Fund) (delayed)

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