Stocks were mixed on Wednesday with the Dow shedding 81-points, and despite a rally in Apple, a Dow component, the China trade talk hit the large global companies yesterday. The Nasdaq gained 0.46% on the heals of the Apple earnings, and the S&P and small caps were each down just slightly.
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There was an FOMC meeting yesterday and there was little chance of a rate hike being announced, but the Fed Chairman did comment about the strength of the economy so that likely means rate hikes coming in September or December, or both.
Between 2008 and 2016 interest rates were virtually 0% and we had the Fed buying bonds (Quantitative Easing) so the market had that wind at its back. Now stocks are near all-time highs yet the Fed is raising rates and unwinding their bond position. Liquidity will not be what is was and that, despite great economic numbers, may not be good news for stocks and we could be setting up another "cleansing", if you will.
When that comes, no one knows. Next week? Next month? Next year? But there's an old adage that says, "Don't fight the Fed." Historically after three hikes the market tends to get finicky but this time we're coming off of a near 0% low, which we've never seen before, so rates are still historically low.
The charts are looking interesting as we see bear flags on many of them, which is normally bearish, but they are also holding above some key support levels and the bears could have some trouble pushing stocks below them. With the weak seasonality this month, they may get their chance, but so far the bulls are not relenting.
The earnings released yesterday were mixed with no real big names reporting, or at least none that would be considered market movers. Other than that, there's not a whole lot going on right now so this will be fairly brief.
The S&P 500 / C-fund has been holding at the 20-day EMA but it seems to be forming a bear flag. They tend to break down, but we've seen these flags break to the upside a couple of times this year already so this isn't an easy call. A full breakdown from the flag would fill the open gap near 2765, and I would really prefer to see that gap get filled before we see new highs, otherwise we'll constantly be looking over our shoulder for the possibility of that gap getting filled eventually.
The small caps (S-fund) have the bear flag but remain above the 50-day EMA. This has been a common theme for many indices.
The Nasdaq Composite is a ditto... bear flags above the 50-day EMA. The last bear flag broke to the upside, but that is not the norm.
The EAFE Index (I-fund) continues to trade just below the 200-day EMA, where bear market rallies go to die. Technically many say an index is in a bear market only after it has fallen 20%, but when the 50-dy EMA is below the 200-day EMA, then it's a bearish market in my book.
The AGG (Bonds / F-fund) was down sharply at the open but the crawled back to close down just modestly. The significance of the action was that the bear flag broke down and it basically closed at the bottom of the flag and right on the 50-dday EMA again.
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: center"] Daily TSP Funds Return
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[TD]
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There was an FOMC meeting yesterday and there was little chance of a rate hike being announced, but the Fed Chairman did comment about the strength of the economy so that likely means rate hikes coming in September or December, or both.
Between 2008 and 2016 interest rates were virtually 0% and we had the Fed buying bonds (Quantitative Easing) so the market had that wind at its back. Now stocks are near all-time highs yet the Fed is raising rates and unwinding their bond position. Liquidity will not be what is was and that, despite great economic numbers, may not be good news for stocks and we could be setting up another "cleansing", if you will.
When that comes, no one knows. Next week? Next month? Next year? But there's an old adage that says, "Don't fight the Fed." Historically after three hikes the market tends to get finicky but this time we're coming off of a near 0% low, which we've never seen before, so rates are still historically low.
The charts are looking interesting as we see bear flags on many of them, which is normally bearish, but they are also holding above some key support levels and the bears could have some trouble pushing stocks below them. With the weak seasonality this month, they may get their chance, but so far the bulls are not relenting.
The earnings released yesterday were mixed with no real big names reporting, or at least none that would be considered market movers. Other than that, there's not a whole lot going on right now so this will be fairly brief.
The S&P 500 / C-fund has been holding at the 20-day EMA but it seems to be forming a bear flag. They tend to break down, but we've seen these flags break to the upside a couple of times this year already so this isn't an easy call. A full breakdown from the flag would fill the open gap near 2765, and I would really prefer to see that gap get filled before we see new highs, otherwise we'll constantly be looking over our shoulder for the possibility of that gap getting filled eventually.
The small caps (S-fund) have the bear flag but remain above the 50-day EMA. This has been a common theme for many indices.
The Nasdaq Composite is a ditto... bear flags above the 50-day EMA. The last bear flag broke to the upside, but that is not the norm.
The EAFE Index (I-fund) continues to trade just below the 200-day EMA, where bear market rallies go to die. Technically many say an index is in a bear market only after it has fallen 20%, but when the 50-dy EMA is below the 200-day EMA, then it's a bearish market in my book.
The AGG (Bonds / F-fund) was down sharply at the open but the crawled back to close down just modestly. The significance of the action was that the bear flag broke down and it basically closed at the bottom of the flag and right on the 50-dday EMA again.
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.
