Slow, slow, slow
by
, 08-24-2018 at 01:11 AM (1539 Views)
Stocks slipped on Thursday as the Dow shed 77-points with modest to minor losses in the broader indices. Once again the double top is holding as resistance but the bears are not putting any pressure on the bulls, so we're having a bit of a standoff rather than a pullback.
After dozens of 1% moves in the first few months of the year, we haven't had any 1% moves in the S&P in the last two months. Trading volume has also dried up with the last two days having the lowest trading volume of the year for non-holiday shortened trading days.
Daily TSP Funds Return
So far the political mess hasn't given the market any trouble as the indices shook off the initial negative reaction to the Michael Cohen guilty plea, but yesterday we saw a China related tariff headline take the indices sharply off their morning highs, so that seems to be the concern for the moment.
Fed Chair Jerome Powell speaks today in Jackson Hole, WY and investors will be listening for clues on his take on the economy and interest rates - the other more immediate major concern going forward since there is an FOMC meeting in September. Then there's a potential government shutdown deadline looming later in September. After all of those trials and tribulations it will be time to focus on the mid-term elections and the polling leading up to it.
So, the market certainly has some catalysts in front of it, but it doesn't seem to be looking too far ahead right now.
Here's a reminder of the seasonality surrounding Labor Day Weekend. The data is old (1950 - 2011) but it is 62 year's worth.
Chart provided courtesy of www.sentimentrader.com
The S&P 500 / C-fund dipped again as it stalls at the old highs. Volume was very light over the last two days and as we get closer to the holiday it may get even lighter. There seems to be more room on the downside given the trading channel, but the bears are still missing in action.
The small caps (S-fund) made another new intraday high but stalled at its rising resistance before pulling back and creating a negative reversal candlestick.
The Dow Transportation Index was down meaningfully for a second straight day after its negative reversal at the old highs. There's rising support near 11,200 so I'd look for that to be tested soon.
The EAFE (I-fund) pulled back sharply after the dollar found its footing again and rallied. The chart filled one small gap on the pullback (blue) but there are several still open (red) in the neighborhood.
The VIX was down early but found support in that 11.50 - 12.00 area that we have been watching (in the Plus Reports), and closed up slightly.
The AGG (bonds) chart was not available for some reason so I am using the chart of the 10-year Treasury Yield. The yield is nearing the bottom of its recent three month trading channel so we'll have to see if that 2.8% area will hold on the downside. If it does, bonds and the F-fund may resume their downside.
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Thanks for reading. Have a great weekend!
Tom Crowley
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