Stocks tried to rally on Wednesday but investors found a reason to sell after the FOMC meeting wrapped up. There was an initial rally in stocks and sell off in bond yields and the dollar after the policy statement, but then volatility took over and they all reversed again shortly afterward. The Dow lost 174-points with a similar percentage loss in the S&P 500, while small caps were flat, but they gave up a solid early gain.
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Earnings continue to shine but it has not been a boost for stocks so far. With interest rates moving higher, the dollar getting stronger, the impact of the tariffs still a question mark, and the continued political chaos in Washington, the stock market and investors seem to be taking a more cautious approach as bottom lines may not be all that clear for the coming quarters. So, the indices are not bouncing on the good news, although they have stayed within a range since the February lows. Perhaps that will continue until the writing on the wall become more legible, but watch the lower end of the ranges. If we start seeing lower lows, then it's a game changer.
The dollar and bond yields were shaken up by some dovish statement from the Fed after their FOMC meeting regarding inflation, but the reaction was brief, as you can see in the charts, and the strength in the dollar resumed, and bond yields bounced back some, after a short but steep dip.
The April Jobs Report comes out tomorrow morning (Friday) and estimates are looking for a gain of 190,000 jobs and an unemployment rate of 4.0%.
The S&P 500 / C-fund is still floundering below the 50-day EMA and dancing precariously above the important support of the 200-day EMA. This chart looks bad but if that 200-day EMA can hold it would obviously be closer to a buy level than a sell, but there's no guarantees that it will hold. There doesn't seem any bad news out there, but when stocks don't rally on good news, there is likely bad news around the corner.
The small caps / S-fund were doing well all day but inched into negative territory just before the close in sympathy with the rest of the market which was tanking late while the dollar rallied. The strong dollar doesn't hurt the small caps as much as the larger companies which do a lot of business overseas.
The EAFE / I-fund was flat but because of the late selling in U.S. stocks and wild gyrations in the dollar after the Fed, the price of the I-fund was not as bad as it could have been and we may see a slight negative adjustment in today's price.
The High Yield Corporate Bond Fund posted a negative reversal day but held onto the 50-day EMA.
The AGG (Bonds / F-fund) was flat after some intraday Fed induced gyrations. It's trying to hold above the support line but this is still fairly bearish for bonds. Still, it could try to fill that open gap and give us a short-term rally.
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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[TD="align: right"][/TD]
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Earnings continue to shine but it has not been a boost for stocks so far. With interest rates moving higher, the dollar getting stronger, the impact of the tariffs still a question mark, and the continued political chaos in Washington, the stock market and investors seem to be taking a more cautious approach as bottom lines may not be all that clear for the coming quarters. So, the indices are not bouncing on the good news, although they have stayed within a range since the February lows. Perhaps that will continue until the writing on the wall become more legible, but watch the lower end of the ranges. If we start seeing lower lows, then it's a game changer.
The dollar and bond yields were shaken up by some dovish statement from the Fed after their FOMC meeting regarding inflation, but the reaction was brief, as you can see in the charts, and the strength in the dollar resumed, and bond yields bounced back some, after a short but steep dip.
The April Jobs Report comes out tomorrow morning (Friday) and estimates are looking for a gain of 190,000 jobs and an unemployment rate of 4.0%.
The S&P 500 / C-fund is still floundering below the 50-day EMA and dancing precariously above the important support of the 200-day EMA. This chart looks bad but if that 200-day EMA can hold it would obviously be closer to a buy level than a sell, but there's no guarantees that it will hold. There doesn't seem any bad news out there, but when stocks don't rally on good news, there is likely bad news around the corner.
The small caps / S-fund were doing well all day but inched into negative territory just before the close in sympathy with the rest of the market which was tanking late while the dollar rallied. The strong dollar doesn't hurt the small caps as much as the larger companies which do a lot of business overseas.
The EAFE / I-fund was flat but because of the late selling in U.S. stocks and wild gyrations in the dollar after the Fed, the price of the I-fund was not as bad as it could have been and we may see a slight negative adjustment in today's price.
The High Yield Corporate Bond Fund posted a negative reversal day but held onto the 50-day EMA.
The AGG (Bonds / F-fund) was flat after some intraday Fed induced gyrations. It's trying to hold above the support line but this is still fairly bearish for bonds. Still, it could try to fill that open gap and give us a short-term rally.
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.
