Stocks opened lower with the Dow down 128-points at yesterday's morning lows, but things drifted higher and with about an hour to go in the trading day the Dow was up about 11-points. Fast forward an hour and the Dow closed with a gain 172-points. The trade war took a positive turn and what looked like decent day for stocks, turned into a big day. Small caps, which aren't as impacted by tariffs, lagged a bit but were still up modestly.
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It was an emotional, buy first, ask questions later, rally that could be vulnerable, but a new direction for tariffs could be a game changer. See if you can spot when the news of concessions on European tariffs was announced. It's a little subtle.
Wall Street started to dismiss the trade war fears recently as it seemed investors figured out that President Trump's ultimate goal was to lower tariffs on both sides, and his scare tactics negotiations may be working. So rather than us evening the score by charging similar tariffs on goods coming into the country, we're seeing that both sides are now steering toward zero tariffs across the board on non-auto, industrial goods. Who knows what the final out come will be, but that announcement was obviously music to investor's ears for now.
The S&P 500 filled an old open gap from January at yesterday's highs and is hitting a lot of resistance right now, and if it is going to continue to move higher from here, it may take a game changer news event to do so. Was yesterday it?
There were a bunch of earnings released yesterday and after the bell Facebook was the largest company to report, and it was a disappointment. The stock was down over 20% in after hours trading. That was shaving about 1.3% off the Nasdaq 100 Index Futures after the bell, which was up 1.4% yesterday before Facebook, so yesterday's gains could be short-lived - at least in the Nasdaq.
Of course it's not the only stock trading today so we'll see what happens at the open with the zero tariff news still fresh in investors' minds.
I'll make this quick today because the bullishness we may see on the charts below, could be reversed if Facebook has an impact on the rest of the market.
The S&P 500 / C-fund rallied sharply on the tariff news and the day's high hit and filled the top of the open gap created way back in January. There's a double dose of resistance near 2850 but with it being so close to an all-time high (about 2875) I would think there would be some program trading to push it there, where we could see a double top pause. Facebook's earnings may prevent that, but it's possible that the S&P won't be as phased as the Nasdaq will be on that report. The tariff news may "trump" it. Pardon the pun.
The small caps (S-fund) had a nice day but given the catalyst for the rally, small caps wouldn't be as impacted, so it only got back about half of Tuesday's losses.
The Dow Transportation Index got back all of Tuesday's losses but the rally ended at the top of that stubborn bear flag again.
The EAFE Index (I-fund) also got a boost from the tariff talk with an extra push by the dollar falling on the day. The problem here was that the overseas markets were closed when the announcement was made so the I-fund may be due a positive fair value adjustment in today's price.
The AGG (Bonds / F-fund) was up slightly on the day but the overhead resistance of the 200-day EMA and the bottom of one of the broken support lines held tough yesterday.
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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It was an emotional, buy first, ask questions later, rally that could be vulnerable, but a new direction for tariffs could be a game changer. See if you can spot when the news of concessions on European tariffs was announced. It's a little subtle.
Wall Street started to dismiss the trade war fears recently as it seemed investors figured out that President Trump's ultimate goal was to lower tariffs on both sides, and his scare tactics negotiations may be working. So rather than us evening the score by charging similar tariffs on goods coming into the country, we're seeing that both sides are now steering toward zero tariffs across the board on non-auto, industrial goods. Who knows what the final out come will be, but that announcement was obviously music to investor's ears for now.
The S&P 500 filled an old open gap from January at yesterday's highs and is hitting a lot of resistance right now, and if it is going to continue to move higher from here, it may take a game changer news event to do so. Was yesterday it?
There were a bunch of earnings released yesterday and after the bell Facebook was the largest company to report, and it was a disappointment. The stock was down over 20% in after hours trading. That was shaving about 1.3% off the Nasdaq 100 Index Futures after the bell, which was up 1.4% yesterday before Facebook, so yesterday's gains could be short-lived - at least in the Nasdaq.
Of course it's not the only stock trading today so we'll see what happens at the open with the zero tariff news still fresh in investors' minds.
I'll make this quick today because the bullishness we may see on the charts below, could be reversed if Facebook has an impact on the rest of the market.
The S&P 500 / C-fund rallied sharply on the tariff news and the day's high hit and filled the top of the open gap created way back in January. There's a double dose of resistance near 2850 but with it being so close to an all-time high (about 2875) I would think there would be some program trading to push it there, where we could see a double top pause. Facebook's earnings may prevent that, but it's possible that the S&P won't be as phased as the Nasdaq will be on that report. The tariff news may "trump" it. Pardon the pun.
The small caps (S-fund) had a nice day but given the catalyst for the rally, small caps wouldn't be as impacted, so it only got back about half of Tuesday's losses.
The Dow Transportation Index got back all of Tuesday's losses but the rally ended at the top of that stubborn bear flag again.
The EAFE Index (I-fund) also got a boost from the tariff talk with an extra push by the dollar falling on the day. The problem here was that the overseas markets were closed when the announcement was made so the I-fund may be due a positive fair value adjustment in today's price.
The AGG (Bonds / F-fund) was up slightly on the day but the overhead resistance of the 200-day EMA and the bottom of one of the broken support lines held tough yesterday.
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.
