Hope your weekend was well spent. We’ve got the markets up yet again
following Friday’s bullish moves across all of the major indices, all
while commodities are backing off a bit on a stronger dollar in recent
days. However, we’re not convinced the strength we’re seeing in the
dollar is going to last.
Interestingly enough, we did end up getting the bullish reversal
confirmation on TLT Friday, the primary ETF tracking long-term bonds. We
mentioned a few times last week if TLT could close above a certain
level on its weekly chart, the technical reversal signal could mean a
reversal in long-term bonds, something that could also end up being an
early sign of weakness ahead for stocks.
Provided below is a weekly chart of TLT, and as you can see, the ETF broke above the 3X3 DMA (blue line) and closed to kick off the year, then found its way back below it after four weeks, only to reverse itself and close back above it just last week. This type of reversal signal is not only often reliable, it can also suggest a reversal that can last a while too.
If this ends up being the case, we could finally get the pullback in stocks we’ve been anticipating now that the NASDAQ Composite has almost found its way to that upper trend line we’ve referenced on so many occasions over the last several weeks. It still remains to be seen at this point, but it’s important to remember most pullbacks over the last few years have been fast and furious once they finally do decide to surface.
On a much more bullish note, small caps finally made a new all-time intra-day high just this morning, something that hasn’t happened all year even though the NASDAQ, the DOW and the S&P 500 have continued to make new all-time highs. Provided below is a daily chart of IWM, the primary ETF tracking the Russell 2000 Small Cap Index, and as you can see, after weeks of sideways consolidation, the ETF is finally having its day, albeit in very lagging fashion.
Provided below is a weekly chart of TLT, and as you can see, the ETF broke above the 3X3 DMA (blue line) and closed to kick off the year, then found its way back below it after four weeks, only to reverse itself and close back above it just last week. This type of reversal signal is not only often reliable, it can also suggest a reversal that can last a while too.
If this ends up being the case, we could finally get the pullback in stocks we’ve been anticipating now that the NASDAQ Composite has almost found its way to that upper trend line we’ve referenced on so many occasions over the last several weeks. It still remains to be seen at this point, but it’s important to remember most pullbacks over the last few years have been fast and furious once they finally do decide to surface.
On a much more bullish note, small caps finally made a new all-time intra-day high just this morning, something that hasn’t happened all year even though the NASDAQ, the DOW and the S&P 500 have continued to make new all-time highs. Provided below is a daily chart of IWM, the primary ETF tracking the Russell 2000 Small Cap Index, and as you can see, after weeks of sideways consolidation, the ETF is finally having its day, albeit in very lagging fashion.
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