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TSP Talk: The S&P 500 up for a 5th straight day

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Stocks jumped out of the gate on Monday morning, quickly recovering Thursday's late, pre-holiday selling, and then proceeded to fill the overhead open gap on the S&P 500. That's where things stalled but by then we had solid gains across the board. The Dow gained 460-points and the high flying Nasdaq tech stocks led again on the upside.

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As the case counts rose over the holiday weekend, COVID hospitalizations and the death rate were not rising at the same levels and Wall Street saw that as a positive sign. The strong jobs report is still ringing in investors' ears that things are moving in the right direction.

While the charts are shaping up and we are seeing decent setups, I still have concerns about some businesses being able to get anywhere near where they were pre-COVID. Casinos, airlines, restaurants, etc., can't possibly regain their old revenue without some kind of vaccine being on the immediate horizon.

But other industries are flourishing under this new stay home / work at home economy. Amazon, Tesla and Netflix are just a few stocks that made new all-time highs yesterday.

China's stock market is doing something interesting, and we'll take a look at the chart down below.

Earnings season is drawing nearer, as is the new July 15th deadline to file and pay taxes, so we'll have to see how much rally this market has left as we head into this period that could trigger some profit taking.

The S&P 500 (C-fund) posted its 5th decent gain in a row, this time filling the open gap that has been open since June 11, and it also moved back into the rising trading channel (red). The action looks good but the June high could be a good place for a double top pause, if we see this chart get above that open gap which held as yesterday's high.

The DWCPF (S-fund) gained 1.4% yesterday but the Russell 2000 small cap Index closed quite a bit off the early highs and you can see all of those black candlesticks on the chart showing that small caps are having a tough time holding onto the morning's opening prices. The 50-day EMA just crossed above the 200-day EMA.

The Dow Transportation Index had a good day but remained stuck below the 200-day EMA for another day.

The EFA (I-fund) was up and got an assist from another weak day for the dollar. The bull flag we talked about yesterday did break to the upside, and it also broke above its 200-day SMA.

China's Shanghai Index has skyrocketed over the last four trading days. StockCharts hadn't updated the chart for Monday yet so I drew in my own candlestick after it closed near 3333. This could have as many negative implications (i.e. bubble) as positive, but I'm surmising that there's no issues with the trade deal right now.

The BND (bond ETF) was down slightly but the yield on the 10-year treasury is having a tough time gaining any traction on the upside, despite what the stock market perceives as a strengthening economy.

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

Tom Crowley

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SPY (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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