TSP Talk Blog

Stocks opened sharply higher on Thursday following some big earnings reports from Apple and Facebook after the bell on Wednesday, but it wasn't as easy as the final gains would indicate. You can see all of the green on the Dow, Nasdaq and S&P 500 charts below, but after gapping up at the open, the S&P 500 peaked and rolled over and never made it any further, and in the case of the Nasdaq and the Russell 2000 small caps, they closed with gains of less than half of the opening highs, so it wasn't totally bullish action despite the gains.

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Apple's strong earnings were one of the catalysts for the rally in stocks yesterday, yet it actually closed down on the day and 3.50 below its intraday high, after all was said and done, so there was some "sell the news" reaction.

You can see the giant "V" action on the S&P 500 chart (.SPX) which is a bullish formation and a positive reversal, but the Russell 2000 small caps chart below that (.RUT) failed to bounce all the way back and it looked more like a bear flag so Friday's action could potentially be a struggle for the small caps.




Internally the action was positive for the NYSE, although share volume was flat, but on the Nasdaq, where those large tech stocks dominate, we saw a lot of internal weakness.




The yield on the 10-year Treasury was up yesterday, but I mentioned this in the forum yesterday - why is it that the yield seems to open higher everyday, then move lower and often close at the lows of the day? All of those black candlesticks indicate days where that happened. Even on many up days, like yesterday. Who keeps buying bonds in this growth and inflationary environment where yields should be rallying (bonds prices down)?




Momentum is a tough force to stop and the market seems to be running on that momentum now, but the indices and indicators do have their share of red flags so as always, nothing is guaranteed.

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The S&P 500 (C-fund) opened higher, above all of those resistance lines, then failed to hold that resistance before rallying back in the second half of the trading day to close at a new all time high. The new highs don't feel all that bullish after we saw how quickly that opening rally was sold. It was up about 25-points in the opening couple of minutes, and 2.5 hours later it was in the red. But, the strong rally in the afternoon created a positive reversal day so the bulls still seem to be in control here.




The DWCPF (S-fund) gapped up with the rest of the indices, but it failed to hold onto those gains and actually closed down quite a bit. It did find support at the April 16 high and then closed right on the March high. It seems to be in an interesting position within those three lines of support and resistance.




The Russell 2000 chart above had a failed breakout of the February high, which I have been calling the right shoulder of a head and shoulders pattern, or the right wing of the mothman formation. It looks a little scary, no?


The EFA (I-fund) continues to flirt with its upper resistance line but for a third straight day it has closed below it. You can see how much the falling dollar has been helping this fund in April, and it may have needed it. Why? ...




I posted the chart of the Chinese Shanghai Index yesterday, which didn't look so good, although it is not a part of the I-fund directly. But Japan is a big part of the I-fund and it has also shown some recent signs of struggling as it has now closed below its 50-day EMA for seven straight days.




The Nasdaq has been hitting a roadblock at the February highs and yesterday's early rally pushed it above there temporarily before the pullback began and pushed it back below it again. There are several open gaps below so the question is whether this can continue to barrel forward without filling some of those gaps. A double top pullback wouldn't be a surprise.




BND (F-fund) opened sharply lower on Thursday but started to rebound back right away. The early weakness pushed it below the bear flag that we have been tracking, but by the close it was back in the flag and near the highs of the day. This is flirting with trouble but I suppose it could always bounce back to the top of the flag in the short-term.




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Thanks for reading. Have a great weekend!

Tom Crowley



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