The masters of trickery were hard at work yesterday as the push higher into, and after, Nvidia's earnings, which came out much better than expected, turned out to be the time to sell stocks -- at least for the day because today we have the Fed speaking at Jackson Hole. It was a classic negative reversal day and, being that we have to make our moves before noon ET, the reversal mostly occurred after the deadline leaving TSP'ers unable to react. It was awful action and it makes Powell's speech that much more important today.
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I don't know what kind of shenanigans were going on yesterday, but the masters of trickery really wanted us buying yesterday morning because they were getting ready to sell, and sell quickly. Whether the selling was out right profit taking from a strong one week rally, or just investors stepping aside before the Jackson Hole speech from Powell, its affect was a technical nightmare that can probably only be mended by a similarly positive reversal after the Fed's speech today.
Nvidia was up big after hours on Thursday after reporting earnings, but by the close yesterday it lost it all but 0.10%, so it was leading the reversal down -- for whatever reason. Their earnings couldn't have been any better.
Despite still not having two positive days in a row in August, there was a big rally off the lows in the S&P 500 (C-fund) of 123-points, or 2.8%. It even managed to get above the 20-day EMA (green) before they pulled the rug out from under the bulls, but if the rally was going to fail, that was the area that was most vulnerable.
At this point the "V" bottom possibility has been tarnished, although not dead yet, and the evidence of a possible bear flag is starting to show. Again, the Fed may have a lot of influence on that formation going forward.
The Yield on the 10-year Treasury was up after the two day decline, and while higher yields and a positive dollar is a headwind for stocks right now, the chart on the 10-year is still indicating a possible pullback from the overhead resistance. Again, what the Fed says about interest rates could be the tell - or is it that yields are telling the Fed what to say? By the way, the 2-year Treasury closed back above 5% yesterday.
The dollar was up big, again another headwind for stocks at the moment. It made a new high and the trend remains firmly higher.
It's not like the Fed is going to raise interest rates today, but any clues to future action is what moves the market more than any particular action. Their next meeting is in September where no change in rates is expected, or at least there's currently only a 20% chance of a hike, but that moves closer to 40% at the November meeting.
Anything that changes that scenario will be a market mover as investors and money managers will be adjusting their allocations accordingly.
The market is very vulnerable but the person who has a chance to change that is on deck and takes the stage at 10 AM ET today. His mission is to decide what is more of an issue - inflation or the risk of a recession. By the way, the Atlanta Fed on GDPnow raised the Q3 GDP estimate to an astounding 5.9%. That's not even close to recessionary data so that may give the Fed some fodder to keep being aggressive on rates.
DWCPF (S-fund) has been less "V" bottom, and more bear flag-like, but it's not completely over yet for a "V" possibility. The 200-day EMA is still holding so it's a little too early to call this dead, but another leg lower could change that.
EFA (I-fund) took a hit with the rest of the US indices, but the rally in the dollar may be making it worse. It is back down testing the 200-day EMA, and the only positive I see here is that we have seen some big rallies after previous retests of lows.
BND (Bonds / F-fund) was down yesterday retracing some of the gains it had on Wednesday. This looks like it could be trying to make a low, but in the short term the open gap near 70.70 and a test of the prior lows are possible short term targets before any serious rebound begins. Of course the Fed could say something that changes everything.
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
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Like what you're seeing on TSP Talk? Why not Tell a Friend about us? We'd really appreciate it, and they may too.
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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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I don't know what kind of shenanigans were going on yesterday, but the masters of trickery really wanted us buying yesterday morning because they were getting ready to sell, and sell quickly. Whether the selling was out right profit taking from a strong one week rally, or just investors stepping aside before the Jackson Hole speech from Powell, its affect was a technical nightmare that can probably only be mended by a similarly positive reversal after the Fed's speech today.
Nvidia was up big after hours on Thursday after reporting earnings, but by the close yesterday it lost it all but 0.10%, so it was leading the reversal down -- for whatever reason. Their earnings couldn't have been any better.
Despite still not having two positive days in a row in August, there was a big rally off the lows in the S&P 500 (C-fund) of 123-points, or 2.8%. It even managed to get above the 20-day EMA (green) before they pulled the rug out from under the bulls, but if the rally was going to fail, that was the area that was most vulnerable.
At this point the "V" bottom possibility has been tarnished, although not dead yet, and the evidence of a possible bear flag is starting to show. Again, the Fed may have a lot of influence on that formation going forward.
The Yield on the 10-year Treasury was up after the two day decline, and while higher yields and a positive dollar is a headwind for stocks right now, the chart on the 10-year is still indicating a possible pullback from the overhead resistance. Again, what the Fed says about interest rates could be the tell - or is it that yields are telling the Fed what to say? By the way, the 2-year Treasury closed back above 5% yesterday.
The dollar was up big, again another headwind for stocks at the moment. It made a new high and the trend remains firmly higher.
It's not like the Fed is going to raise interest rates today, but any clues to future action is what moves the market more than any particular action. Their next meeting is in September where no change in rates is expected, or at least there's currently only a 20% chance of a hike, but that moves closer to 40% at the November meeting.
Anything that changes that scenario will be a market mover as investors and money managers will be adjusting their allocations accordingly.
The market is very vulnerable but the person who has a chance to change that is on deck and takes the stage at 10 AM ET today. His mission is to decide what is more of an issue - inflation or the risk of a recession. By the way, the Atlanta Fed on GDPnow raised the Q3 GDP estimate to an astounding 5.9%. That's not even close to recessionary data so that may give the Fed some fodder to keep being aggressive on rates.
DWCPF (S-fund) has been less "V" bottom, and more bear flag-like, but it's not completely over yet for a "V" possibility. The 200-day EMA is still holding so it's a little too early to call this dead, but another leg lower could change that.
EFA (I-fund) took a hit with the rest of the US indices, but the rally in the dollar may be making it worse. It is back down testing the 200-day EMA, and the only positive I see here is that we have seen some big rallies after previous retests of lows.
BND (Bonds / F-fund) was down yesterday retracing some of the gains it had on Wednesday. This looks like it could be trying to make a low, but in the short term the open gap near 70.70 and a test of the prior lows are possible short term targets before any serious rebound begins. Of course the Fed could say something that changes everything.
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.
