Stocks opened sharply higher on Tuesday after the futures were up strongly all night, but as soon as that opening bell rang we saw sellers step up. By the close we saw modest losses almost across the board, although small caps (actually more midcaps) had a good day to help the S-fund to a nice gain on the day. The dollar and yields opened lower but battled back into the afternoon which was likely the catalyst for the reversal down of the stock market.
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The ISM Manufacturing Index came in a little stronger than estimates, as did the JOLTS report which showed more job openings. This isn't really what the market wanted to see as we remain in a 'good news is bad news' environment when it comes to economic strength.
Despite the 10-year Treasury Yield and the dollar being down slightly yesterday, there was a dramatic reversal after the open bell to take these off their worst levels, and if you didn't believe these two have been calling the shots for the stock market this year, yesterday's action might convince you. This is Tuesday's intraday charts of the three - 10-year T-note ($TNX), dollar (UUP) and the S&P 500 ($SPX) from the opening bell until the close yesterday.
I highlighted Amazon and Apple yesterday as charts that could be on the brink of a make or break move, and of course these two are such a big part of the major US stock market indices that they could make or break the whole market. On Tuesday they both fell again and for Amazon, that a was break below the head and shoulders pattern neckline support. That's clearly not a good sign and with that breakdown the initial downside target goes to somewhere near about 85.
For Apple 155 and 150 looks like key pivot points so it has a little wiggle room left, but not much.
Back to interest rates: the Fed is expected to raise the Fed Funds rate by 0.75% or 75 basis points, today. The market has basically priced in an 84% chance of that happening so anything else would be a surprise. What everyone seems to really want to hear this afternoon is what they plan to do at their December 14 meeting. They don't really have to say, but investors will parse every word they hear to find clues to the next move.
This top chart shows the market expecting 75 basis points today.
And currently it is almost 50/50 on whether they raise another 50 basis points or 75 at that December meeting so there is something at stake here if we do get some answers today.
We will get the October jobs report this coming Friday. Estimates are looking for a gain of 242,000 jobs and an unemployment rate of 3.5%. With the Fed's FOMC meeting in the rearview mirror by Friday, it may not be as big of a deal since we will also get the November jobs report in early December before the next FOMC meeting on December 13 - 14.
The S&P 500 (C-fund) continues to trade below that 3900 resistance area, as if in a holding pattern while waiting on the Fed announcement. Despite the resistance, the short-term trend is up, but the longer term trend is still down. I'm on the defensive side right now, but to be honest, there are so many people who seem to be bearish that it probably increases the chances of a rally. I hope I'm wrong about that because I want an opportunity to buy lower.
The DWCPF (small caps / S-fund) had a little false breakout yesterday after a big morning rally. It did close with some very nice gains yesterday, but like the large caps, this index also gave back a lot of the morning gains. It closed back within what I believe is a good sized bear flag, and that made the breakout yesterday (failed breakout) that much more curious.
BND (bonds / F-fund) was up after a modest dip in yields, but yields have been trending higher and this bond fund lower, even after the breakout above the descending resistance line in late October.
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
To get weekly or daily notifications when we post new commentary, sign up HERE.
Thanks so much 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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The ISM Manufacturing Index came in a little stronger than estimates, as did the JOLTS report which showed more job openings. This isn't really what the market wanted to see as we remain in a 'good news is bad news' environment when it comes to economic strength.
Despite the 10-year Treasury Yield and the dollar being down slightly yesterday, there was a dramatic reversal after the open bell to take these off their worst levels, and if you didn't believe these two have been calling the shots for the stock market this year, yesterday's action might convince you. This is Tuesday's intraday charts of the three - 10-year T-note ($TNX), dollar (UUP) and the S&P 500 ($SPX) from the opening bell until the close yesterday.
I highlighted Amazon and Apple yesterday as charts that could be on the brink of a make or break move, and of course these two are such a big part of the major US stock market indices that they could make or break the whole market. On Tuesday they both fell again and for Amazon, that a was break below the head and shoulders pattern neckline support. That's clearly not a good sign and with that breakdown the initial downside target goes to somewhere near about 85.
For Apple 155 and 150 looks like key pivot points so it has a little wiggle room left, but not much.
Back to interest rates: the Fed is expected to raise the Fed Funds rate by 0.75% or 75 basis points, today. The market has basically priced in an 84% chance of that happening so anything else would be a surprise. What everyone seems to really want to hear this afternoon is what they plan to do at their December 14 meeting. They don't really have to say, but investors will parse every word they hear to find clues to the next move.
This top chart shows the market expecting 75 basis points today.
And currently it is almost 50/50 on whether they raise another 50 basis points or 75 at that December meeting so there is something at stake here if we do get some answers today.
We will get the October jobs report this coming Friday. Estimates are looking for a gain of 242,000 jobs and an unemployment rate of 3.5%. With the Fed's FOMC meeting in the rearview mirror by Friday, it may not be as big of a deal since we will also get the November jobs report in early December before the next FOMC meeting on December 13 - 14.
The S&P 500 (C-fund) continues to trade below that 3900 resistance area, as if in a holding pattern while waiting on the Fed announcement. Despite the resistance, the short-term trend is up, but the longer term trend is still down. I'm on the defensive side right now, but to be honest, there are so many people who seem to be bearish that it probably increases the chances of a rally. I hope I'm wrong about that because I want an opportunity to buy lower.
The DWCPF (small caps / S-fund) had a little false breakout yesterday after a big morning rally. It did close with some very nice gains yesterday, but like the large caps, this index also gave back a lot of the morning gains. It closed back within what I believe is a good sized bear flag, and that made the breakout yesterday (failed breakout) that much more curious.
BND (bonds / F-fund) was up after a modest dip in yields, but yields have been trending higher and this bond fund lower, even after the breakout above the descending resistance line in late October.
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
To get weekly or daily notifications when we post new commentary, sign up HERE.
Thanks so much 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.
