The market surprised many traders and investors yesterday after the PPI report followed the CPI by coming in hotter than expected, yet stocks rallied as if it was good news. The ECB (European Central Bank) raised interest rates but suggested it would be the last hike, and that was most likely the catalyst, but with yields up, the dollar up, oil up to new highs, and those inflationary pricing reports, it seemed like it should have been a day that sold off, but it wasn't. Is that telling us something?
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What's going on this week that would make the action stray from the recent trend? How about quadruple witching expiration week? It has a bullish bias, but next week, post expiration week, has had some issues in the past. If we were to take the September seasonality chart literally, Monday the 18th is actually a good day historically before things turn south, but seasonality isn't that easy and rarely a primary indicator so next week the market will just have a modest headwind, not a wall, that it will have to deal with.
Chart provided courtesy of www.sentimentrader.com
The Yield on the 10-Year Treasury bounced back to regain the losses from Wednesday. That sounds like bad news, but that negative reversal day on Wednesday still could signify some topping action.
The dollar also bounced back and here it is making new highs. The market has hated that recently, but not yesterday.
The market has also been concerned about the rising price of crude oil, and yesterday it moved above $90 for the first time in a while. And that's while the dollar is rising so that is a strong move up. The market ignored it.
Is it some shenanigans toward the end of the quadruple witching expiration week where many futures contracts and options expire at the close of business today? Very possibly, and the action could be tricky today as well.
The Dow Transportation Index posted a high volume outside day on Wednesday, and followed that up with a nice rally yesterday. That looks really good and potentially a low of some sort, but again is it expiration day related and just trickery as money mangers unwind their expiring futures and options contracts?
I was prepared to get a little more defensive for next week but yesterday's action certainly made that a tougher decision than I thought it could be, and I am rethinking my plan.
The S&P 500 (C-fund) is trading near 4500 again and it has hit that level several times over the last two years. The action yesterday filled one small open gap (blue box) and it is now pushing up toward a declining resistance line, and above that, another open gap that could be a target if the resistance gets taken out. Perhaps we are getting one more push higher because investors have gotten quite bearish again and "they", the big money, may need more people buying so they can lighten up at higher prices. This is not the season for new highs, but you never know.
DWCPF (S-fund) still looks terrible with it trading below the 50-day EMA, it's in a bear flag, and that bear flag is within the right shoulder of a head and shoulders pattern, which are generally bearish. The caveat I keep mentioning is that Head and Shoulders patterns don't always break down in bullish markets, and 2023 has been bullish.
EFA (I-fund) had a big day despite new highs in the dollar, and that's because of the ECB signal that they may be done raising interest rates. That's a nice catalyst but the chart is at some stiff resistance right here, and there's an open gap below.
BND (Bonds / F-fund) looks like it needs to go down to fill that gap and the bear flag is part of the reason. However, it may be trying to form a bottom here. It could just take some time.
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
Daily Market Commentary Archives
To get weekly or daily notifications when we post new commentary, sign up HERE.
Like what you're seeing on TSP Talk? Why not Tell a Friend about us? We'd really appreciate it, and they may too.
Thanks!
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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What's going on this week that would make the action stray from the recent trend? How about quadruple witching expiration week? It has a bullish bias, but next week, post expiration week, has had some issues in the past. If we were to take the September seasonality chart literally, Monday the 18th is actually a good day historically before things turn south, but seasonality isn't that easy and rarely a primary indicator so next week the market will just have a modest headwind, not a wall, that it will have to deal with.
Chart provided courtesy of www.sentimentrader.com
The Yield on the 10-Year Treasury bounced back to regain the losses from Wednesday. That sounds like bad news, but that negative reversal day on Wednesday still could signify some topping action.
The dollar also bounced back and here it is making new highs. The market has hated that recently, but not yesterday.
The market has also been concerned about the rising price of crude oil, and yesterday it moved above $90 for the first time in a while. And that's while the dollar is rising so that is a strong move up. The market ignored it.
Is it some shenanigans toward the end of the quadruple witching expiration week where many futures contracts and options expire at the close of business today? Very possibly, and the action could be tricky today as well.
The Dow Transportation Index posted a high volume outside day on Wednesday, and followed that up with a nice rally yesterday. That looks really good and potentially a low of some sort, but again is it expiration day related and just trickery as money mangers unwind their expiring futures and options contracts?
I was prepared to get a little more defensive for next week but yesterday's action certainly made that a tougher decision than I thought it could be, and I am rethinking my plan.
The S&P 500 (C-fund) is trading near 4500 again and it has hit that level several times over the last two years. The action yesterday filled one small open gap (blue box) and it is now pushing up toward a declining resistance line, and above that, another open gap that could be a target if the resistance gets taken out. Perhaps we are getting one more push higher because investors have gotten quite bearish again and "they", the big money, may need more people buying so they can lighten up at higher prices. This is not the season for new highs, but you never know.
DWCPF (S-fund) still looks terrible with it trading below the 50-day EMA, it's in a bear flag, and that bear flag is within the right shoulder of a head and shoulders pattern, which are generally bearish. The caveat I keep mentioning is that Head and Shoulders patterns don't always break down in bullish markets, and 2023 has been bullish.
EFA (I-fund) had a big day despite new highs in the dollar, and that's because of the ECB signal that they may be done raising interest rates. That's a nice catalyst but the chart is at some stiff resistance right here, and there's an open gap below.
BND (Bonds / F-fund) looks like it needs to go down to fill that gap and the bear flag is part of the reason. However, it may be trying to form a bottom here. It could just take some time.
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
Daily Market Commentary Archives
To get weekly or daily notifications when we post new commentary, sign up HERE.
Like what you're seeing on TSP Talk? Why not Tell a Friend about us? We'd really appreciate it, and they may too.
Thanks!
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.
