Stocks opened the New Year on a sour note as the indexes plummeted at the open and within minutes the Dow was down 398-points. That turned out to be the low of the day, and the bulls came in buying with both fists taking most of the indexes into the green by the close, and the Dow ended with a minor 19-point gain. The Nasdaq led with a solid 0.46% gain. That created very positive outside reversal day patterns on the charts, but there's a problem...
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The big story came after the bell when Apple dramatically lowered their revenue guidance for this quarter and the stock fell sharply in after hours trading. This sent the Nasdaq and S&P 500 futures down sharply so, unless something changes, we're likely looking at another weak open - although how the market opens hasn't been a great indicator to how it closes lately.
So, that will make this commentary very short because what the charts are showing right now, after Wednesday's close, may get negated assuming the negative futures roll into today's opening action.
Before Apple's announcement the story was mostly about a positive reversal in the price of oil yesterday as it rallied 2.5% on the day. The problem there is that it is in yet another bear flag and near the 20-day EMA so I suspect it could easily fail again. The stock market may not like that either.
The December Jobs report comes out on Friday morning and estimates are looking for a gain of 180,000 jobs, an unemployment rate of 3.7%, and wages rising 0.3%.
The S&P 500 / C-fund created a very nice looking positive outside reversal day pattern on the chart yesterday, but there are two problems. One is that Apple will likely be a drag on the index today, but also, that could be a flat top formation, and those are short-term bearish formations. Plus the 20-day EMA is only about 1% above yesterday's high and that's a test in this bear market.
The DWCPF (small caps / S-fund) was leading on the upside early yesterday giving an almost immediate confirmation of the January Effect, but it didn't last long and the S-fund finished flat on the day, slightly below the large caps' performance. There's a flat top on this chart as well.
Here's the chart of Apple and you can see just how much damage was done since the high in October. Now they are guiding lower and are down even further. But this is Apple and despite the bad news, I would think it seems like a good place to start picking up some shares. I am not a buy and holder by any means, and I don't buy individual stocks too often, and if I do, it's usually for a quick trade. But I bought some shares of Apple after hours yesterday at 146.44. I may not get instant gratification, but that's 37% below the highs and I'll hold it for a while and see if it works out.
The AGG (Bonds / F-fund) moved up above those late 2017 highs, but a double top is still in play. The momentum is certainly on this chart's side, but the angle of incline leads me to believe that any pullback could be sharp.
That's all for today. Like I said, the Apple situation changed everything that happened yesterday. We're in a bear market and bad news isn't usually bought. If anything, this could be the catalyst for the test of the lows. But if we do hold and reverse higher again however, it could be a very good sign for stocks and a change in character for the market that has been selling off on most news. Let's enjoy the show today and see if we get some clues.
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.php
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
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The big story came after the bell when Apple dramatically lowered their revenue guidance for this quarter and the stock fell sharply in after hours trading. This sent the Nasdaq and S&P 500 futures down sharply so, unless something changes, we're likely looking at another weak open - although how the market opens hasn't been a great indicator to how it closes lately.
So, that will make this commentary very short because what the charts are showing right now, after Wednesday's close, may get negated assuming the negative futures roll into today's opening action.
Before Apple's announcement the story was mostly about a positive reversal in the price of oil yesterday as it rallied 2.5% on the day. The problem there is that it is in yet another bear flag and near the 20-day EMA so I suspect it could easily fail again. The stock market may not like that either.
The December Jobs report comes out on Friday morning and estimates are looking for a gain of 180,000 jobs, an unemployment rate of 3.7%, and wages rising 0.3%.
The S&P 500 / C-fund created a very nice looking positive outside reversal day pattern on the chart yesterday, but there are two problems. One is that Apple will likely be a drag on the index today, but also, that could be a flat top formation, and those are short-term bearish formations. Plus the 20-day EMA is only about 1% above yesterday's high and that's a test in this bear market.
The DWCPF (small caps / S-fund) was leading on the upside early yesterday giving an almost immediate confirmation of the January Effect, but it didn't last long and the S-fund finished flat on the day, slightly below the large caps' performance. There's a flat top on this chart as well.
Here's the chart of Apple and you can see just how much damage was done since the high in October. Now they are guiding lower and are down even further. But this is Apple and despite the bad news, I would think it seems like a good place to start picking up some shares. I am not a buy and holder by any means, and I don't buy individual stocks too often, and if I do, it's usually for a quick trade. But I bought some shares of Apple after hours yesterday at 146.44. I may not get instant gratification, but that's 37% below the highs and I'll hold it for a while and see if it works out.
The AGG (Bonds / F-fund) moved up above those late 2017 highs, but a double top is still in play. The momentum is certainly on this chart's side, but the angle of incline leads me to believe that any pullback could be sharp.
That's all for today. Like I said, the Apple situation changed everything that happened yesterday. We're in a bear market and bad news isn't usually bought. If anything, this could be the catalyst for the test of the lows. But if we do hold and reverse higher again however, it could be a very good sign for stocks and a change in character for the market that has been selling off on most news. Let's enjoy the show today and see if we get some clues.
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.php
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
