05/21/26
Stocks soared from the opening bell into the close yesterday as the investment world awaiting earnings from the the largest company in the world. Investors were obviously optimistic, despite the stock market, especially the semiconductor sector, already overly stretched in the short-term. Small caps were up big with oil and yields falling sharply.
Nvidia posted earnings last night after the closing bell, and as usual the numbers were great. That doesn't always translate into a big move higher in the stock. As a matter of fact it was down 5 of the prior 7 earnings releases. During yesterday's "normal" trading hours, NVDA was up 1.3%. After reporting earnings it was trading down about 1% after hours trading last I checked, so it seems to be ho, hum report, but how will the other semiconductors and A-I related stocks react? The index futures opened lower last night.
Bottom line, estimates are always elevated. They always seem to beat. Then the market tends to digest the numbers to see what it means.
Nvidia is the prototype, if you will, of the A-I trade so it was extremely important that they did well, which they did, but did it measure up to the expectation for which the whole A-I trade is measured?
The longer term weekly chart of Nvidia does have some significant ups and downs, despite almost always beating earnings like they did last night. Over the last several years, Nvidia has been a great investment for the buy and holders, but buying Nvidia at the bottom of this long term channel, and selling it at the top, would have worked out really well for traders. Here it is flirting with the top again. Is it ready to take it to yet another level of bullishness, or does this look like it needs a breather?
Being the largest company in the US stock market, it can account for about 25% of the move in the S&P 500 each day.
S&P 500 earnings in general have been great and are growing at a rate (28%) not seen in the last 20 years, outside of the 2020 COVID stimulus growth. That's a good recipe for the stock market, but again, has it been priced in already?
And, if there is a headwind, it is the price of oil and those rising Treasury Yields, both of which were down meaningfully yesterday, helping the stock market rally the way it did. Those charts suggested that some backing and filling was certainly a possibility, but they are both bullish looking charts at this point, meaning they are more likely to go up in the near future, than down, after some possible backing and filling. Of course that could change if the situation with Iran changes.
The pennant formation is still intact on the WTIC Oil chart, and we talked yesterday about the room it had on the downside before running into the rising support. Yesterday it came close to testing that support, and it held.
The 10-year Treasury Yield had that breakout from a bullish cup and handle formation, but those formations do tend to come back to retest the breakout line, and in this case it left a large open gap in its wake. Filling that gap would not change the upside trend.
The S&P 500 (C-fund) resumed its rally after the three day pullback. They say you should be buying 2 to 3 day pullbacks in a bull market, but as we have seen, the S&P 500 has been moving vertically for about two months now with barely a hiccup. It also broke its rising support line during that three day dip. Filling gaps and / or retesting the breakout line is a typical market action, but this market hasn't been acting typically lately.
The MACD Histogram was down yesterday, despite the rally, so the negative divergence continues.
The Dow Transportation Index broke back above its 20-day moving average yesterday after weeks below it. The broader market barely blinked when this market leader dropped sharply, but that correction followed a major rally so it was coming back to reality. I still wonder if the S&P 500 will do the same, but now that the Transports are acting better, perhaps the S&P will be immune from the the leader's recent decline?
The Fed Meeting Minutes were released yesterday, and as hawkish as it sounded, investors brushed it off.
Holiday Closing: Some financial markets will be closed on Monday, 5/25 in observance of Memorial Day. The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (May 25) will be processed Tuesday night (May 26) at Tuesday's closing share prices.
Additional TSP Fund Charts:
DWCPF (S-fund) made a big move that it needed to make after I gave it some crap for falling below the breakout line a second time. But as good as it looked, do I have the courage to suggest this could be the right shoulder of a bearish head and shoulders pattern forming? Did I say that out loud?
ACWX (I-fund) jumped as well and it almost filled in the open gap from last week. The dollar dipping helped, but it too just filled in an open gap from Tuesday. This is a tough call. There's resistance above, but it has been consolidating nicely for weeks now.
BND (bonds / F-fund) exploded higher with yields tanking. Again, there's an open gap above that needs filled, and it did get back above its 200-day average. It may have just created a double bottom, if this isn't starting a new downtrend after breaking below the pennant formation.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
Updated monthly:
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
For more info our other premium services, please go here... www.tsptalk.com/premiums.php
To get weekly or daily notifications when we post new commentary, sign up HERE.
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.
Stocks soared from the opening bell into the close yesterday as the investment world awaiting earnings from the the largest company in the world. Investors were obviously optimistic, despite the stock market, especially the semiconductor sector, already overly stretched in the short-term. Small caps were up big with oil and yields falling sharply.
| Daily TSP Funds Return More returns |
Nvidia posted earnings last night after the closing bell, and as usual the numbers were great. That doesn't always translate into a big move higher in the stock. As a matter of fact it was down 5 of the prior 7 earnings releases. During yesterday's "normal" trading hours, NVDA was up 1.3%. After reporting earnings it was trading down about 1% after hours trading last I checked, so it seems to be ho, hum report, but how will the other semiconductors and A-I related stocks react? The index futures opened lower last night.
Bottom line, estimates are always elevated. They always seem to beat. Then the market tends to digest the numbers to see what it means.
Nvidia is the prototype, if you will, of the A-I trade so it was extremely important that they did well, which they did, but did it measure up to the expectation for which the whole A-I trade is measured?
The longer term weekly chart of Nvidia does have some significant ups and downs, despite almost always beating earnings like they did last night. Over the last several years, Nvidia has been a great investment for the buy and holders, but buying Nvidia at the bottom of this long term channel, and selling it at the top, would have worked out really well for traders. Here it is flirting with the top again. Is it ready to take it to yet another level of bullishness, or does this look like it needs a breather?
Being the largest company in the US stock market, it can account for about 25% of the move in the S&P 500 each day.
S&P 500 earnings in general have been great and are growing at a rate (28%) not seen in the last 20 years, outside of the 2020 COVID stimulus growth. That's a good recipe for the stock market, but again, has it been priced in already?
And, if there is a headwind, it is the price of oil and those rising Treasury Yields, both of which were down meaningfully yesterday, helping the stock market rally the way it did. Those charts suggested that some backing and filling was certainly a possibility, but they are both bullish looking charts at this point, meaning they are more likely to go up in the near future, than down, after some possible backing and filling. Of course that could change if the situation with Iran changes.
The pennant formation is still intact on the WTIC Oil chart, and we talked yesterday about the room it had on the downside before running into the rising support. Yesterday it came close to testing that support, and it held.
The 10-year Treasury Yield had that breakout from a bullish cup and handle formation, but those formations do tend to come back to retest the breakout line, and in this case it left a large open gap in its wake. Filling that gap would not change the upside trend.
The S&P 500 (C-fund) resumed its rally after the three day pullback. They say you should be buying 2 to 3 day pullbacks in a bull market, but as we have seen, the S&P 500 has been moving vertically for about two months now with barely a hiccup. It also broke its rising support line during that three day dip. Filling gaps and / or retesting the breakout line is a typical market action, but this market hasn't been acting typically lately.
The MACD Histogram was down yesterday, despite the rally, so the negative divergence continues.
The Dow Transportation Index broke back above its 20-day moving average yesterday after weeks below it. The broader market barely blinked when this market leader dropped sharply, but that correction followed a major rally so it was coming back to reality. I still wonder if the S&P 500 will do the same, but now that the Transports are acting better, perhaps the S&P will be immune from the the leader's recent decline?
The Fed Meeting Minutes were released yesterday, and as hawkish as it sounded, investors brushed it off.
Holiday Closing: Some financial markets will be closed on Monday, 5/25 in observance of Memorial Day. The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (May 25) will be processed Tuesday night (May 26) at Tuesday's closing share prices.
Additional TSP Fund Charts:
DWCPF (S-fund) made a big move that it needed to make after I gave it some crap for falling below the breakout line a second time. But as good as it looked, do I have the courage to suggest this could be the right shoulder of a bearish head and shoulders pattern forming? Did I say that out loud?
ACWX (I-fund) jumped as well and it almost filled in the open gap from last week. The dollar dipping helped, but it too just filled in an open gap from Tuesday. This is a tough call. There's resistance above, but it has been consolidating nicely for weeks now.
BND (bonds / F-fund) exploded higher with yields tanking. Again, there's an open gap above that needs filled, and it did get back above its 200-day average. It may have just created a double bottom, if this isn't starting a new downtrend after breaking below the pennant formation.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
Updated monthly:
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
For more info our other premium services, please go here... www.tsptalk.com/premiums.php
To get weekly or daily notifications when we post new commentary, sign up HERE.
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.
