We saw a negative reversal day on Wednesday and that put some pressure on stocks early on Thursday. After the initial weak open, there was an attempt to push higher, but that failed rather quickly. The selling did not accelerate into the close so the dip buyers were trying to push back. The Dow ended with a loss of 83-points, which was well off the nearly 200-point loss at midday.
Daily TSP Funds Return
Apple was hit hard yesterday and that set the tone, but it was actually rising bond yields that scared investors as the 10-Year Treasury Yield moved over 2.90% yesterday. If you remember, it was the jump of the 10-year yield above 2.6% in late January, which was a multi-year high, that spooked stocks at their peak earlier in the year.
The yield slowly moved back down from the 2.95% highs down to 2.72%, but this month it has moved back up to flirt with multi-year highs again, and the stock market showed some discomfort.
The S&P 500 / C-fund moved down yesterday but seemed to stabilize that the 50-day EMA after filling that small open gap. Finding support at the 50-EMA is a must because that bear flag is still viable, and it is getting quite narrow some something is going to give soon.
The small caps / S-fund has less of a bear flag and more of a "V" bottom look to it. It hasn't filled its open gap yet, and if it does, it will break its rising trading channel, and that may not be good. The 50-day EMA is just below, about 20-points) to try to hold as support.
The Dow Transportation Index fell sharply after the big rally on Wednesday and stalled at the upper end of the trading channel. There was a bit of a positive reversal created so I suspect it will try to rally early Friday, but it's where it closes that is more important.
The EAFE Index / I-fund hit the upper resistance line and pulled back. It posted a negative outside reversal day and the rally in the dollar didn't help.
The price of oil posted a negative reversal day after making another multi-year high earlier in the day. It had broken above the rising trading channel, but closed back within it and that could mean a deeper dive into the channel. That will pull down the energy sector which has helped lead this latest rally in stocks.
The AGG (Bonds / F-fund) was down sharply, gapping down below a potentially key support level. Being below the 200 and 50-day EMAs, the bear case for bonds remains, although a short-term move up to fill the gap is possible, but 106.60 should now be resistance.
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