Stocks opened lower on Tuesday with some modest to moderate early selling after the PPI report came inline with estimates before the opening bell. It didn't take long for the bulls to stabilize the downside and start buying into the close again to contain the losses. The PPI number was a little hot and some may have hoped for something lower than the 0.6% that we got.
The indices have been in need of a rest after 17 out of 19 positive days for the S&P 500. Whether the bears can do any damage is another story. The charts look very extended, but the the late buying showed that some bulls don't care about that. Bonds rallied big, but hit some resistance and flipped over to close off their highs.
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The S&P 500 (C-fund) pulled back modestly posting the first loss since October 27. It's so far above its key moving averages that the 200-day EMA is barely in the picture. That's 500 points below this week's highs. Lots of resistance overhead but they are all moving higher so the chart could improve just by consolidating and moving sideways. That won't make the bears happy as the underinvested want an opportunity to buy much lower. Again, we rarely get what we want from the market, or at least it won't make it easy on us.
The DWCPF (S-fund) closed well off the lows to close with a minor 0.22% loss, and the uptrend is still intact. There are plenty of downside targets for a pullback including the moving averages, opens gaps, support lines, etc., but so far the bulls are keeping the pressure on and pinning this to the recent highs.
The EFA (I-fund) was down but it remains in the rising channel heading for the old highs. There are still several open gaps below, so those are never out of the question as eventual downside targets, but for now the top one near 80.50 would be the most realistic pullback target, as well as the 50-day EMA - if this doesn't just go straight to new highs.
BND (Bonds / F-fund) had another big day, and that was after it flipped over to close well off the highs. Once again a "hot" inflation number from the PPI report sent yields lower, which I don't understand, but that's what happened. There was some selling during the day, perhaps profit taking, after this chart hit a longer-term resistance line.
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.
The indices have been in need of a rest after 17 out of 19 positive days for the S&P 500. Whether the bears can do any damage is another story. The charts look very extended, but the the late buying showed that some bulls don't care about that. Bonds rallied big, but hit some resistance and flipped over to close off their highs.
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Well surprise, surprise. Stocks don't go up every day, but it can feel like that at times. The losses weren't nothing in comparison to recent gains, but sometimes just seeing momentum wane can cause a rush for the exits with a lot of profits out there that may want to get locked in.
We saw in 2018 that stocks don't always go up in the last two months of the year, but they certainly go up more often than they go down in November and December, so how much of a pullback, if any, can we expect?
There have been plenty of calls for a short-term pullback from investors, but we know how that goes... The market will likely do what we all least expect, and as I mentioned yesterday, that could be either a continued rally right into the end of the year with not much of a pullback at all, or a severe pullback worse than most are anticipating. I guess we could all get lucky and get what we they all think, and what I had been expecting, which is a minor pullback, maybe 3 to 5%, and then a rally into the end of the year. But the chances that we're all right is probably not high, so expect the unexpected.
Speaking of unexpected, I still can't think of why the yield on the 10-year is sinking the way it is. Like I said, most people are expecting higher yields as the Fed contemplating raising rates, plus the fear of inflation. Both would usually be pushing yields higher, as would yesterday's PPI number, but clearly that is not what is happening tight now.
That open gap near 1.4% that we have been highlighting as a possible downside target was basically filled yesterday, so perhaps that will turn yields around, but can it be that easy? Was the move down just a technical clean up for the chart?
The dollar fell for a third straight day after the big rally off the early September lows, and that is making some sense given the spending in D.C. and the Fed keeping rates low. But that is still a bull flag, although it had a failed breakout this week, so we'll have to see how this plays out.
Per tsp.gov: Holiday Closing: Some financial markets will be closed on Thursday, November 11 in observance of the Veterans Day holiday. The Thrift Savings Plan will also be closed. Transactions that would have been processed Thursday night (November 11) will be processed Friday night (November 12), at Friday's closing share prices.
I will take the day off as well so won't be posting a commentary that day or a Plus Report that day.
We saw in 2018 that stocks don't always go up in the last two months of the year, but they certainly go up more often than they go down in November and December, so how much of a pullback, if any, can we expect?
There have been plenty of calls for a short-term pullback from investors, but we know how that goes... The market will likely do what we all least expect, and as I mentioned yesterday, that could be either a continued rally right into the end of the year with not much of a pullback at all, or a severe pullback worse than most are anticipating. I guess we could all get lucky and get what we they all think, and what I had been expecting, which is a minor pullback, maybe 3 to 5%, and then a rally into the end of the year. But the chances that we're all right is probably not high, so expect the unexpected.
Speaking of unexpected, I still can't think of why the yield on the 10-year is sinking the way it is. Like I said, most people are expecting higher yields as the Fed contemplating raising rates, plus the fear of inflation. Both would usually be pushing yields higher, as would yesterday's PPI number, but clearly that is not what is happening tight now.
That open gap near 1.4% that we have been highlighting as a possible downside target was basically filled yesterday, so perhaps that will turn yields around, but can it be that easy? Was the move down just a technical clean up for the chart?
The dollar fell for a third straight day after the big rally off the early September lows, and that is making some sense given the spending in D.C. and the Fed keeping rates low. But that is still a bull flag, although it had a failed breakout this week, so we'll have to see how this plays out.
Per tsp.gov: Holiday Closing: Some financial markets will be closed on Thursday, November 11 in observance of the Veterans Day holiday. The Thrift Savings Plan will also be closed. Transactions that would have been processed Thursday night (November 11) will be processed Friday night (November 12), at Friday's closing share prices.
I will take the day off as well so won't be posting a commentary that day or a Plus Report that day.
The S&P 500 (C-fund) pulled back modestly posting the first loss since October 27. It's so far above its key moving averages that the 200-day EMA is barely in the picture. That's 500 points below this week's highs. Lots of resistance overhead but they are all moving higher so the chart could improve just by consolidating and moving sideways. That won't make the bears happy as the underinvested want an opportunity to buy much lower. Again, we rarely get what we want from the market, or at least it won't make it easy on us.
The DWCPF (S-fund) closed well off the lows to close with a minor 0.22% loss, and the uptrend is still intact. There are plenty of downside targets for a pullback including the moving averages, opens gaps, support lines, etc., but so far the bulls are keeping the pressure on and pinning this to the recent highs.
The EFA (I-fund) was down but it remains in the rising channel heading for the old highs. There are still several open gaps below, so those are never out of the question as eventual downside targets, but for now the top one near 80.50 would be the most realistic pullback target, as well as the 50-day EMA - if this doesn't just go straight to new highs.
BND (Bonds / F-fund) had another big day, and that was after it flipped over to close well off the highs. Once again a "hot" inflation number from the PPI report sent yields lower, which I don't understand, but that's what happened. There was some selling during the day, perhaps profit taking, after this chart hit a longer-term resistance line.
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Thanks for reading, and thank you to all veteran's for their service, I salute you! Have a great holiday and we'll see you back here on Friday.
Tom Crowley
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 for reading, and thank you to all veteran's for their service, I salute you! Have a great holiday and we'll see you back here on Friday.
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.
