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Quiet day to start earnings week

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Stocks floundered at the open on Monday but stabilized and held up well closing closer to the highs of the day, despite the red numbers. The Dow slipped 28-points while small caps and the Transportation Index lagged on the day. The Transports may feel a little more pain today after J.B. Hunt posted disappointing earnings after the bell yesterday.

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At the risk of repeating myself, which I do on almost a daily basis, stocks have come a long way in a short amount of time as we head into the thick of earnings season, and there could be a set up for a "sell the news" reaction. The one positive is that expectations for earnings have been very low so perhaps the surprises will be on the positive side?

It will likely all come down to 2nd and 3rd quarter guidance that we get from these companies, rather than the numbers for the 1st quarter, which as I said, are already expected to be soft.



The S&P 500 (C-fund) was down - although basically flat on the day - but it came back from steeper morning losses. The lows yesterday nearly filled the open gap from Friday, but not quite.




The DWCPF (S-fund) lagged the small caps but the lows held above the prior highs, which is a good sign technically.




The Dow Transportation Index was down sharply on the day, filled an open gap, and is trying to hold at the old resistance line, but there may be some headwinds heading into today's trading because a disappointing earnings report from J.B. Hunt Transport Service after the bell yesterday.




The EFA (I-fund) was up slightly and it continues to ride below the rising resistance line.




The dollar was down slightly yesterday but that is a clear bull flag so there's reason to believe this will break to the upside, which could put some pressure on the I-fund in the short-term.




The short-term indicators have come off their overbought levels and are now close to neutral. The support line of the oversold lows has been rising and if this continues we might see stocks stabilize and try to move higher yet again without having pulled back much at all. That doesn't mean that is what it will do, but that is the current trend.




The AGG (Bonds / F-fund) didn't move much, although the F-fund had a gain of 0.05%, so we're still watching that 108 area as a potential pullback target after last week's breakdown from the rising support.




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

Tom Crowley


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


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S&P500 (C Fund) (delayed)

(Stockcharts.com Real-time)
DWCPF (S Fund) (delayed)

(Stockcharts.com Real-time)
EFA (I Fund) (delayed)

(Stockcharts.com Real-time)
BND (F Fund) (delayed)

(Stockcharts.com Real-time)

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