TSP Talk Blog

New month, new direction. All the fears of rising yields seemed to go by the wayside once we got into March, and the same pattern that ended January and started February manifests again to end February and start March. The Dow gained 603-points and it looked like just about every sector took advantage of the rally. Small caps (S-fund) and the Nasdaq continue to walk hand in hand, as both gained 3% on the day. Bonds also rallied.

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We had that reversal in many of the charts on Thursday, and even though stocks were down on Friday - mostly late in the final minutes if you recall - that was a bit of a tell that stocks may be ready for a relief rally, if not something more significant.




The March seasonality chart gave us a hint that the start of March could be good, but not 2-3% good on the first day. The question is whether day one stole the thunder for the week, or if there's more to come? The latter half of the month looks like trouble, however.


Chart provided courtesy of www.sentimentrader.com


We get the February Jobs Report on Friday and estimates are looking for a gain of 200,000 jobs, and an unemployment rate of 6.3%.

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The S&P 500 (C-fund) is repeating the pattern of the pullback in late January and recovery in early February. Does that mean new highs are coming? I wish it was that easy, but that was some strong action across all sectors yesterday. Conveniently, and coincidentally, the lows on Friday basically filled the open gap from near the start of the February rally.




The DWCPF (small caps / S-fund) had another huge day, and up or down, these moves have been massive lately, which can be a warning sign in and of itself. But the chart looks fine right now. A breakdown again would change that in a hurry. The 2080 area looks like a must hold, and that 2150 area is the bottom of an open gap that could get tested.




The EFA (I-fund) seems to have found support in a very clean area - the 50-day EMA. At this point it's new highs or trouble for most of these indices.




I posted this as one of the three big reversal charts above but I wanted to point out the huge move in the HYG High Yield Corporate Bonds Fund yesterday. That 1.12% gain is one of the biggest one day gains that I have seen in a while on this chart.




The BND (bonds / F-fund) have turned up as yield have peaked. Yes, it could be a temporary bounce, but that's OK if you're in bonds. They've come a long way down and the relief rally could be impressive, There's not much resistance until the moving averages, and there is a large open gap near the 50-day EMA.




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

Tom Crowley



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