Stocks opened higher on Monday but faded quickly, and then went into choppy mode into the close. The Dow, S&P 500, and Nasdaq all finished near the flat line, while the more volatile small caps and the I-fund lost ground. This was heading into the next wave of Mag 7 earnings as Microsoft reports after the bell today, so investors were surprisingly favoring the large caps into big tech earnings. Add in tomorrow's Fed meeting, and things could get whippy out there for a few days.
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It was a flat day and trading volume was on the light side with so much at stake in the coming days, so we didn't get too much information on Monday. It was an uneventful day but the trading felt like there were nerves out there before a big week of news, which we've been harping on. Often the volatility during news events sets up good opportunities, but it could be a good buying opportunity, or a selling opportunity, depending on what unfolds. If the Fed acts on Wednesday or even hints of some kind of unexpected move, the market could move in one direction, but if big cap tech stocks miss estimates it could go another way.
If you're looking to buy there could be something that triggers some selling that you can use to buy lower. Or if you're looking to sell, you may get a knee-jerk reaction to the upside from the Fed to sell. Of course we are dealing with the TSP and intraday swings are just noise since we can only buy or sell the closing prices, and what we see in early trading may not be what we get at the close, so it's tough, but I think the action could get whippy this week so maybe you will get the opportunity you're looking for - whatever that is.
The 10-year Treasury Yield fell yesterday and tested its recent lows. The fact that it held at the prior low could indicate a double bottom, which would be bad news for the F-fund, but we also saw the recent rally back up to the 200-day EMA fail and turnover again, and this has been good for the F-fund. The trend is down still so the F-fund looks safe, but if this yield makes its way back above the 200-day EMA, that could change.
The dollar rallied sharply yesterday and that put pressure on the S and I-fund, both of which lost about a half of a percent. The UUP chart did fill in that blue open gap and stall, so it may have been a relief rally just doing some backing and filling on the upside before rolling over again. That may be wishful thinking for the stock market bulls, but the red bear flag is still in the picture.
The AAII Investor Sentiment Survey dropped sharply last week as investors became much more bearish. It was a fairly sharp drop for one week as the bulls to bears ratio went from well over 2.0 to 1, down to 1.36 to 1. I marked other weeks where it was coming off a sharp decline and this year moves down to this level did give us a decent buying opportunity, but last summer around this time it fell in a similar manner and stocks fell for several more weeks afterward.
The price of oil fell another 1.6% yesterday down below $76 a barrel. This helps stocks for now, but the reason for the decline may not be helpful.
Microsoft reports after the bell today. META reports on the 31st, and Apple and Amazon on August 1. There's an FOMC meeting today and Wednesday. No interest rate cut is expected at this meeting but we should get clues about their September meeting where the current odds of at least a 0.25% cut are now 100% (99.6% to be precise.) We also get the jobs report on Friday, plus a few other important economic reports.
The TSP announced a new L-fund on Friday. You can read more about it here.
The S&P 500 (C-fund) tried to break through its blue descending trading channel, but the rally failed a couple of times yesterday and it remains in the downtrend. It didn't quite fill in the open gap below last week, and there are two open gaps above, so there is a lure in each direction. Three days of Mag 7 earnings, the Fed meeting, and the jobs report could cause enough volatility to fill them all so buckle up.
DWCPF (S-fund) was up early but failed to hold and it barely held onto Friday's lows by the close. It does appear to be holding above the top of that bull flag so no damage done yet, but a move back into that flag opens the door to another possible meaningful pullback, and there are open gaps below that would love to be filled.
The EFA (I-fund) had a bad day and the strength in the dollar held this hostage for most of the day. The 100-day EMA is held at the low last week but it remains in a descending trading channel, plus it fell back below the 50-day EMA. This needs help quickly.
BND (bonds / F-fund) was up testing the previous highs, which tends to trigger some short term profit taking. It's a big week for economic data and Fed talk, so this is just waiting for its next big move - whichever way that may be. Why it would be down, I don't know, but the wide blue trading channel does still have a lot of room on the downside.
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
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.html
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.
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It was a flat day and trading volume was on the light side with so much at stake in the coming days, so we didn't get too much information on Monday. It was an uneventful day but the trading felt like there were nerves out there before a big week of news, which we've been harping on. Often the volatility during news events sets up good opportunities, but it could be a good buying opportunity, or a selling opportunity, depending on what unfolds. If the Fed acts on Wednesday or even hints of some kind of unexpected move, the market could move in one direction, but if big cap tech stocks miss estimates it could go another way.
If you're looking to buy there could be something that triggers some selling that you can use to buy lower. Or if you're looking to sell, you may get a knee-jerk reaction to the upside from the Fed to sell. Of course we are dealing with the TSP and intraday swings are just noise since we can only buy or sell the closing prices, and what we see in early trading may not be what we get at the close, so it's tough, but I think the action could get whippy this week so maybe you will get the opportunity you're looking for - whatever that is.
The 10-year Treasury Yield fell yesterday and tested its recent lows. The fact that it held at the prior low could indicate a double bottom, which would be bad news for the F-fund, but we also saw the recent rally back up to the 200-day EMA fail and turnover again, and this has been good for the F-fund. The trend is down still so the F-fund looks safe, but if this yield makes its way back above the 200-day EMA, that could change.
The dollar rallied sharply yesterday and that put pressure on the S and I-fund, both of which lost about a half of a percent. The UUP chart did fill in that blue open gap and stall, so it may have been a relief rally just doing some backing and filling on the upside before rolling over again. That may be wishful thinking for the stock market bulls, but the red bear flag is still in the picture.
The AAII Investor Sentiment Survey dropped sharply last week as investors became much more bearish. It was a fairly sharp drop for one week as the bulls to bears ratio went from well over 2.0 to 1, down to 1.36 to 1. I marked other weeks where it was coming off a sharp decline and this year moves down to this level did give us a decent buying opportunity, but last summer around this time it fell in a similar manner and stocks fell for several more weeks afterward.
The price of oil fell another 1.6% yesterday down below $76 a barrel. This helps stocks for now, but the reason for the decline may not be helpful.
Microsoft reports after the bell today. META reports on the 31st, and Apple and Amazon on August 1. There's an FOMC meeting today and Wednesday. No interest rate cut is expected at this meeting but we should get clues about their September meeting where the current odds of at least a 0.25% cut are now 100% (99.6% to be precise.) We also get the jobs report on Friday, plus a few other important economic reports.
The TSP announced a new L-fund on Friday. You can read more about it here.
The S&P 500 (C-fund) tried to break through its blue descending trading channel, but the rally failed a couple of times yesterday and it remains in the downtrend. It didn't quite fill in the open gap below last week, and there are two open gaps above, so there is a lure in each direction. Three days of Mag 7 earnings, the Fed meeting, and the jobs report could cause enough volatility to fill them all so buckle up.
DWCPF (S-fund) was up early but failed to hold and it barely held onto Friday's lows by the close. It does appear to be holding above the top of that bull flag so no damage done yet, but a move back into that flag opens the door to another possible meaningful pullback, and there are open gaps below that would love to be filled.
The EFA (I-fund) had a bad day and the strength in the dollar held this hostage for most of the day. The 100-day EMA is held at the low last week but it remains in a descending trading channel, plus it fell back below the 50-day EMA. This needs help quickly.
BND (bonds / F-fund) was up testing the previous highs, which tends to trigger some short term profit taking. It's a big week for economic data and Fed talk, so this is just waiting for its next big move - whichever way that may be. Why it would be down, I don't know, but the wide blue trading channel does still have a lot of room on the downside.
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
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.html
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.
