It was another choppy day of trading but by the close the bulls won the battle and most indices closed in positive territory. Small caps led on the upside with a solid 0.72% gain while the C and I-fund were up just slightly. Bonds and the F-fund were up modestly as yields had a choppy day but closed on the downside.
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It was another day where Nvidia was down, but all six of the other Magnificent 7 stocks were up. And, with Nvidia down, there was a little more rotation into the broader indices as we saw small caps outperform, but it was all a warm up for today's important inflation data - the PCE Prices report.
The 10-year Treasury Yield was down after a strong move higher at the open, creating a negative reversal day and keeping that bearish looking flag intact. It did catch some support at the 200-day EMA, which it jumped over on Wednesday. Bear flags tend to break down but today's PCE report might determine that.
The Dow Transportation Index could not make any further progress as the descending resistance is still holding firm. It's had a nice run and it does remain above the 50-day EMA, but it's time to make its move or we could see another leg lower starting soon. The Transports can be the market leader.
The PCE Prices and Personal Income and Spending reports come in this morning (Friday) before the opening bell. Here is the year over year chart of the core PCE inflation data. It has certainly going in the right direction as it comes off the disastrous levels that we saw in 2021 and 2022, but last month it was still up 2.8% year over year, which is higher than it has been in a long, long time before the Covid triggered inflation began.
We'll also get the Chicago PMI [manufacturing] report about 15 minutes after the opening bell, which was historically low last month and actually had a big impact on bond yields and the stock market - for a few hours, anyway.
Here's that chart from last month which was flirting with 2008 and 2020 recession levels:
Source: Chicago PMI Unexpectedly Craters To Depression Levels | ZeroHedge
And this was the odd reaction the day of the prior Chicago PMI report which was released 15 minutes after the opening bell on May 31. Stocks were opening on the upside that day, the PMI came out and tanked the S&P 500 for about three hours to the tune of 65-points before we had a major reversal on the final day of trading in May, and it turned out to be a big day for stocks.
I am writing this before Thursday's night's presidential debate so I can only speculate on whether it will be impactful to the stocks market. Thursday night's futures will have to be the "tell" because before the opening bells rings on Friday we'll have gotten the PCE prices report, so it may be tough to know (if you don't watch the futures), what is having the biggest impact.
The S&P 500 (C-fund) has been churning into today's PCE report and we saw a similar formation heading into the release of the CPI report in May, and that put an end to the rally, although only for about a week before the bulls showed up again. Other than the possibility of a repeat of that breakdown, it is actually more of a bullish looking flag.
DWCPF (S-fund) led yesterday and it has its days, but it just can't seem to follow up on the outperformance. The rally stalled at the 50-day EMA again yesterday, which has been a key level of support and resistance for this chart all year. Other than the fake out earlier this month, a break of that 50 day average has led to more in the same direction. It's breaking above or below that line that has been tough.
The EFA (I-fund) was up slightly as more strength in the dollar held it back on Thursday. I don't like the bearish looking flag on this one, but there is a large open gap up by 80 that could try to provide some positive influence and negate the flag for a while.
BND (bonds / F-fund) rallied and filled in some of the open gap from Wednesday. It continues to churn inside the old February gap and that is helping it create a bullish flag.
Thanks so much for reading! Have a great weekend!
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 another day where Nvidia was down, but all six of the other Magnificent 7 stocks were up. And, with Nvidia down, there was a little more rotation into the broader indices as we saw small caps outperform, but it was all a warm up for today's important inflation data - the PCE Prices report.
The 10-year Treasury Yield was down after a strong move higher at the open, creating a negative reversal day and keeping that bearish looking flag intact. It did catch some support at the 200-day EMA, which it jumped over on Wednesday. Bear flags tend to break down but today's PCE report might determine that.
The Dow Transportation Index could not make any further progress as the descending resistance is still holding firm. It's had a nice run and it does remain above the 50-day EMA, but it's time to make its move or we could see another leg lower starting soon. The Transports can be the market leader.
The PCE Prices and Personal Income and Spending reports come in this morning (Friday) before the opening bell. Here is the year over year chart of the core PCE inflation data. It has certainly going in the right direction as it comes off the disastrous levels that we saw in 2021 and 2022, but last month it was still up 2.8% year over year, which is higher than it has been in a long, long time before the Covid triggered inflation began.
We'll also get the Chicago PMI [manufacturing] report about 15 minutes after the opening bell, which was historically low last month and actually had a big impact on bond yields and the stock market - for a few hours, anyway.
Here's that chart from last month which was flirting with 2008 and 2020 recession levels:
Source: Chicago PMI Unexpectedly Craters To Depression Levels | ZeroHedge
And this was the odd reaction the day of the prior Chicago PMI report which was released 15 minutes after the opening bell on May 31. Stocks were opening on the upside that day, the PMI came out and tanked the S&P 500 for about three hours to the tune of 65-points before we had a major reversal on the final day of trading in May, and it turned out to be a big day for stocks.
I am writing this before Thursday's night's presidential debate so I can only speculate on whether it will be impactful to the stocks market. Thursday night's futures will have to be the "tell" because before the opening bells rings on Friday we'll have gotten the PCE prices report, so it may be tough to know (if you don't watch the futures), what is having the biggest impact.
The S&P 500 (C-fund) has been churning into today's PCE report and we saw a similar formation heading into the release of the CPI report in May, and that put an end to the rally, although only for about a week before the bulls showed up again. Other than the possibility of a repeat of that breakdown, it is actually more of a bullish looking flag.
DWCPF (S-fund) led yesterday and it has its days, but it just can't seem to follow up on the outperformance. The rally stalled at the 50-day EMA again yesterday, which has been a key level of support and resistance for this chart all year. Other than the fake out earlier this month, a break of that 50 day average has led to more in the same direction. It's breaking above or below that line that has been tough.
The EFA (I-fund) was up slightly as more strength in the dollar held it back on Thursday. I don't like the bearish looking flag on this one, but there is a large open gap up by 80 that could try to provide some positive influence and negate the flag for a while.
BND (bonds / F-fund) rallied and filled in some of the open gap from Wednesday. It continues to churn inside the old February gap and that is helping it create a bullish flag.
Thanks so much for reading! Have a great weekend!
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.
