TSP Talk Blog

Stocks rallied back from another early dismal sell off to close with solid gains and near the highs of the day on Thursday. The Dow closed with a gain of about 200-points, coming back from an early 300-point decline. Yields were stable but bonds hit some resistance. The dollar was up, but it is facing facing resistance. The index charts bounced off key support and are testing some resistance.

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The weekly jobless claims came in below estimates, and now that stimulus checks are going out, and the Fed has their interest rate policy set through 2023, perhaps economic good news can be construed as good news again. Estimates were looking for 735,000 new claims, and the actual number was 684,000.

The recent rally in the dollar put pressure on prices, including stock prices, oil and other commodities. It may be hitting some resistance now, and if that 200-day EMA can hold as resistance, we could get a pullback and perhaps reignite some buying.



I don't know if you've seen this headline, but it could be a negative impact on global stock markets if the problem isn't fixed soon. This is from CNBC.com:

Suez Canal blockage is delaying an estimated $400 million an hour in goods "Lloyd’s List calculates blockage is costing $400 million an hour. "Lloyd’s values the canal’s westbound traffic at roughly $5.1 billion a day, and eastbound traffic at around $4.5 billion a day. "The blockage is further stressing an already strained supply chain." More: https://www.cnbc.com/2021/03/25/suez-canal-blockage-is-delaying-an-estimated-400-million-an-hour-in-goods.html

That's something to keep an eye on this weekend if you're worried about what next week will bring.

There's four more trading days left in March, and the rally yesterday was perhaps a sign that the end of quarter rebalancing was coming to an end, but as we'll see in the charts, there is still some resistance to overcome, even though support seems to have held for now.

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The S&P 500 (C-fund) came down sharply in early trading on Thursday, hit that 50-day EMA and conveniently bounced as if that was where the buyers were patiently waiting. That still looks like a bull flag (red) but the angle of the flag is a little steep for my liking, so I think it needs to break to the upside soon, or it may turn into something else.




The DWCPF (small caps / S-fund) had a big day but it remains in that steep descending trading channel (red) within that right shoulder. The longer term trend has tilted downward (blue). Yesterday's low was a good place for it to find support as it may be the neckline (bottom) of the H&S pattern.




The EFA (I-Fund) also found nice support at the 50-day EMA, like a good bull market should, despite the dollar rallying sharply. The I-fund seems to have been under-priced again because of the late rally in the U.S.




The Dow Transportation Index actually made a new all time closing high yesterday, and it seems to have crawled back into that rising channel, although that channel may have widened this week.




The VIX took a wild ride yesterday but ended the day south of 20 again.




BND (bonds / F-fund) was up early, hit the 20-day EMA, and backed off a little. The open gap from earlier in the month was filled with yesterday's move, so maybe the rally in bonds over? That would mean yields will go back up - do we want to see 2% on the 10-year Treasury? Maybe not yet.




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Thanks for reading. Have a great weekend!

Tom Crowley


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