TSP Talk Blog

Stocks rallied on Friday, a quadruple witching expiration day, pumping up trading volume dramatically as it typically does. The Dow gained 139-points but it, and the other indices, drifted lower after peaking in early afternoon trading. We saw some key resistance taken out on the S&P 500 as it closed above that 2815 level that we have been talking about, but we did see some negative reversals on the charts by the close.

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It was a very strong week for stocks overall, with the S&P 500 having it's best week since November (almost 3%), which is a bit of a surprise given the strength we've seen the first couple of months of the year.

There is an FOMC meeting this week on the 19 - 20th with a policy announcement on the 20th. Some expect one more possible rate hike this year, but probably not at this meeting. They seemed to have completely reversed their outlook since late last year from that of trying to put the breaks on an overheating economy, to one that does not want to get in the way of growth and they're talking quantitative easing as a normal tool - not just for emergencies.

It's difficult to fight a Fed with that approach, who seems to be in propping up the market mode, but what are they seeing out there to move to this new very accommodative posture after being so hawkish a few months ago?

We head into the weaker seasonal half of the month of March this week as we have a void between now and the start of the first quarter earnings reports, but we should see some earnings warnings. We could also hear more about the trade deal, but the longer that goes on without a conclusion, the more investors could get antsy and concerned since a deal is basically priced into the market already.

Administrative note: Our TSP Talk March Madness Contest is getting started. Deadline to sign up is early Thursday before the first game. For more info, please go here... March Madness 2019.

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The S&P 500 (C-fund) poked above that strong resistance line on Friday, a day that saw very high trading volume because of options and futures contracts expiring. That was the highest close of 2019. There tends to be a lot of price finagling by traders on a day like that because there is so much as stake and every little move can make or break certain contracts. Because of that, the action can completely change in the trading days following expiration day so we'll see if that breakout level can hold as we head into the new week.




The DWCPF (S-fund) had been lagging a bit of late and as you can see it didn't make a new 2019 high like the S&P 500 did, and there have actually been a couple of negative reversal days created on the chart recently, including on Friday.




The Dow Transportation Index has an interesting chart. It was down moderately on Friday while everything else seemed to be sailing smoothly. There was some descending resistance at Friday's highs, and it ended up closing below the 200-day EMA again, but I suppose we could also be looking at a small bull flag (blue). So, we have some good and bad things going on here, and I'm eager to see what this does next.




The EFA (I-fund) had a nice day as the dollar dipped, plus the overseas markets were closed while the U.S. market was fading off the highs late on Friday.




The dollar moved lower again but it remains in that rising trading channel to start the new week. Whether the bottom of that channel holds or breaks may determine the fate of the I-fund this week, with a breakdown being the bullish outcome.




The AGG (F-fund) made another new high on Friday and bonds continue to be surprisingly strong as yields remain surprisingly low. It's up against resistance in that rising trading channel, but the resistance is rising. It may take some kind of economic headline to send this one back to the bottom of that channel.




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Thanks for reading. We'll see you back here tomorrow.

Tom Crowley


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