After a rather muted Friday of trading, stocks rallied dramatically just before the bell to end the 2nd quarter. The gains weren't huge but it was that late spike that made it memorable. We were heading into the weekend G-20 and trade meetings, which had investors on the nervous side early, but window dressing seemed to be the theme as the closing bell was ringing, and even after the bell the index futures kept rising.
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The S&P 500 was barely positive and the Nasdaq and Dow were actually negative -- until that last minute spike higher on Friday, which we talked about in Friday's reports as "window dressing." We just had the strongest June in decades and money managers did not want to show too much cash in their portfolios in their 2nd quarter reports. Whether that means some profit taking going forward remains to be seen, because mom and pop will read their weekend papers talking about the best June and the strong start to the first half and want to jump in if they aren't already there. So there's a case for a good start to July, on top of the bullish seasonal bias the first half of July has. Plus the futures opened sharply higher on Sunday evening.
Chart provided courtesy of www.sentimentrader.com
Not all early Julys have been great in recent years, but judging by the positive futures opening up on Sunday evening, this one is going to start off on a strong note. The second half of July can be much tougher so the trades are for the nimble, and seeing some profit taking before the second half of the month gets here is very possible.
Stocks spent all of May fading while trade negotiations went south, then June turned it all around. In the meantime the Fed, probably more important, has Wall Street pricing in 3 to 4 rate cuts over the next year. That makes for a lot of pent-up energy for both sides if either turns out not to be the case. No rate cuts, the market will tank. No trade agreement, investors could get cranky. Trade agreement, the market should rally.
A "temporary timeout" was called on new tariffs, which is a positive for stocks and the futures are reacting positively as I said, but just to keep the waters muddied, there is still no clear path to an deal actual deal so 25% tariffs are still being imposed on $250 billion of goods, and the Eurasia Group still sees only a 45% chance that a trade deal will get done this year.
In between this trade talk and the next Fed meeting we'll get 2nd quarter earnings rolling in staring in a couple of weeks, and guidance has not been all that great, so we'll find out if earnings, trade, or interest rates are going to run the show, or if it's a combination off the three, and put together, it's a little muddled.
This all sounds like it could be a volatile summer and volatility can mean good trade set ups - but with two IFT's per month and morning deadlines, it's never as easy as it sounds.
The June Jobs Report will come out early on Friday morning and estimates are looking for a gain of 160,000 jobs, an unemployment rate of 3.6%, and wage growth of 0.3%
After getting off to a poor start last week, the S&P 500 (C-fund) rallied strongly for a second straight day to end end the week last week, and judging by how the futures market opened on Sunday evening, that rally is going to roll into this holiday week. It looks like we may see another gap up opening and off course we know they can get filled quickly, unless it turns into a runaway gap. There's still an open gap down near 2900, but when the market opens on Monday morning there should be another at Friday's highs near 2944, and if they are going to be filled, the gap may have to turn into an exhaustion gap.
With the futures rallying on the non-malignant trade talks this weekend, the Dow may open up above that line I drew before I saw the futures, and it was the top of a long-term trading channel that we saw getting testing again. The last few breakouts failed, and here we go again.
The DWCPF (S-fund) had back-to-back big rallies and we may be having a third one, so we'll either be getting a great selling opportunity for those in the fund, or this could be the start of the small caps move back toward the May high, but also the all-time highs of near 1500 from last year. It's been a while. Is it time?
The Dow Transportation Index cracked above the 50 and 200-day EMA with authority on Friday. Obviously key technical levels, and with what looks like another rally to start the new week, the 3 to 5 day close confirmation looks very possible.
The EFA (I-fund) is still lagging this year but it has actually been performing well recently with the help of a breakdown in the dollar, and because of that we may not want to overlook this fund going forward
The dollar has formed a bearish flag after the recent breakdown from that long-term rising trading channel.
AGG (Bonds / F-fund) has been moving sideways for a few days, and that has led to new legs higher in the past, so despite a chart that looks like it may have gone too far, too fast, this little pause may be setting up another pop for bonds.
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.
[TABLE="align: center"]
[TR]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] More returns[/TD]
[/TR]
[/TABLE]
[/TD]
[TD][/TD]
[TD="align: center"]
[/TR]
[/TABLE]
The S&P 500 was barely positive and the Nasdaq and Dow were actually negative -- until that last minute spike higher on Friday, which we talked about in Friday's reports as "window dressing." We just had the strongest June in decades and money managers did not want to show too much cash in their portfolios in their 2nd quarter reports. Whether that means some profit taking going forward remains to be seen, because mom and pop will read their weekend papers talking about the best June and the strong start to the first half and want to jump in if they aren't already there. So there's a case for a good start to July, on top of the bullish seasonal bias the first half of July has. Plus the futures opened sharply higher on Sunday evening.
Chart provided courtesy of www.sentimentrader.com
Not all early Julys have been great in recent years, but judging by the positive futures opening up on Sunday evening, this one is going to start off on a strong note. The second half of July can be much tougher so the trades are for the nimble, and seeing some profit taking before the second half of the month gets here is very possible.
Stocks spent all of May fading while trade negotiations went south, then June turned it all around. In the meantime the Fed, probably more important, has Wall Street pricing in 3 to 4 rate cuts over the next year. That makes for a lot of pent-up energy for both sides if either turns out not to be the case. No rate cuts, the market will tank. No trade agreement, investors could get cranky. Trade agreement, the market should rally.
A "temporary timeout" was called on new tariffs, which is a positive for stocks and the futures are reacting positively as I said, but just to keep the waters muddied, there is still no clear path to an deal actual deal so 25% tariffs are still being imposed on $250 billion of goods, and the Eurasia Group still sees only a 45% chance that a trade deal will get done this year.
In between this trade talk and the next Fed meeting we'll get 2nd quarter earnings rolling in staring in a couple of weeks, and guidance has not been all that great, so we'll find out if earnings, trade, or interest rates are going to run the show, or if it's a combination off the three, and put together, it's a little muddled.
This all sounds like it could be a volatile summer and volatility can mean good trade set ups - but with two IFT's per month and morning deadlines, it's never as easy as it sounds.
The June Jobs Report will come out early on Friday morning and estimates are looking for a gain of 160,000 jobs, an unemployment rate of 3.6%, and wage growth of 0.3%
After getting off to a poor start last week, the S&P 500 (C-fund) rallied strongly for a second straight day to end end the week last week, and judging by how the futures market opened on Sunday evening, that rally is going to roll into this holiday week. It looks like we may see another gap up opening and off course we know they can get filled quickly, unless it turns into a runaway gap. There's still an open gap down near 2900, but when the market opens on Monday morning there should be another at Friday's highs near 2944, and if they are going to be filled, the gap may have to turn into an exhaustion gap.
With the futures rallying on the non-malignant trade talks this weekend, the Dow may open up above that line I drew before I saw the futures, and it was the top of a long-term trading channel that we saw getting testing again. The last few breakouts failed, and here we go again.
The DWCPF (S-fund) had back-to-back big rallies and we may be having a third one, so we'll either be getting a great selling opportunity for those in the fund, or this could be the start of the small caps move back toward the May high, but also the all-time highs of near 1500 from last year. It's been a while. Is it time?
The Dow Transportation Index cracked above the 50 and 200-day EMA with authority on Friday. Obviously key technical levels, and with what looks like another rally to start the new week, the 3 to 5 day close confirmation looks very possible.
The EFA (I-fund) is still lagging this year but it has actually been performing well recently with the help of a breakdown in the dollar, and because of that we may not want to overlook this fund going forward
The dollar has formed a bearish flag after the recent breakdown from that long-term rising trading channel.
AGG (Bonds / F-fund) has been moving sideways for a few days, and that has led to new legs higher in the past, so despite a chart that looks like it may have gone too far, too fast, this little pause may be setting up another pop for bonds.
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.
