After being negative in the early afternoon, something lit a fire under the stock market, and the Dow ended the day up 323-points, and it was the under performing index. It looks a little fishy, but that often happens around major Fed appearances. The dollar, yields, and oil were all down yesterday, helping the bullish cause for stocks.
I did not see Thursday's rally coming, but I was expecting some possibly trickery to get us leaning the wrong way. Is that what yesterday's 1.4% rally was all about, or have investors confidently figured out what Fed Chair Powell is going to say in today's Jackson Hole speech?
[TABLE="align: center"]
[TR]
[TD="align: center"]
[/TD]
[TD]
[/TD]
[TD="width: 338, align: center"] Daily TSP Funds Return
[TABLE="align: center"]
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
In yesterday's commentary I said, "I was thinking that a continued sell off into Powell's speech on Friday could set up a good buying opportunity, but if we start seeing a bounce into that speech, we could see the opposite. They ever make it easy."
Well, we saw the bounce. So, do we sell off from here? The Fed does not like to disappoint the market but they have a chance to give it to us straight, and can we trust them to do so? As we mentioned yesterday, the Fed got it wrong in a big way last year at this Jackson Hole Symposium when they were confident that inflation was "transitory." Do they have the fortitude this time to give us the real scoop, or do they want to hide the reality of the situation so as to not crush the stock market?
I don't have the answers and of course they know better than I do, but are they willing to give it to us straight?
A wider look at the S&P 500 in 2022 shows that we saw a lot of these kind of rallies that looked very promising, stop on a dime and reverse course. That's what the red arrows below show. There has been a big bounce off the lows, but the major downtrend is still intact.
More upside this morning may be possible since mom and pop are seeing yesterday's spike, and that could be the place where "they", whoever they are, pull the rug out from under the indices, and the small guy gets trapped again. Otherwise, I am completely barking up the wrong tree, but I have been programmed over the years to expect the unexpected.
I look at the fundamental picture as kind of a mess right now, but the stock market isn't always looking at right now, but rather 6 months or more down the road, and perhaps it sees something that we're (or at least I'm) not seeing.
Yesterday the 2-year Treasury Note yield was up near 3.4%. The 10-year T-note closed just over 3.0%. That's a whopper of an inverted yield curve and that is not generally painting a good economic picture, so why would stocks rally? Why would we ever expect a move up near the old highs when things are much worse then they were a year ago?
Today we will get some very interesting economic data and the PCE Prices report may rival the CPI as the top indicator for the inflation situation.
The S&P 500 (C-fund) has had a nice 2-day rally heading into today's Jackson Hole Symposium and that was enough to inch it back above that 200-day EMA, but that 200-day MA (orange) failed rather easily this month and in a bear market, that's about were we'd expect the indices to fail. The question is, are we still in a bear market? The open gap at 4219 is getting close to being filled and we know that can be a lure, so maybe that all this recent bounce is all about - filling that gap.
BND (Bonds / F-fund) also rallied as we saw yields move down, but this chart has been following the S&P 500 chart fairly closely, and perhaps it is also just looking to fill that overhead open gap? That support near 74.60 looks pretty good, but I said yesterday, there's not a lot of support below that so it has to hold.
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 for reading. I appreciate it. Have a great weekend!
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.
I did not see Thursday's rally coming, but I was expecting some possibly trickery to get us leaning the wrong way. Is that what yesterday's 1.4% rally was all about, or have investors confidently figured out what Fed Chair Powell is going to say in today's Jackson Hole speech?
[TABLE="align: center"]
[TR]
[TD="align: center"]
[TD]
[/TD]
[TD="width: 338, align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
In yesterday's commentary I said, "I was thinking that a continued sell off into Powell's speech on Friday could set up a good buying opportunity, but if we start seeing a bounce into that speech, we could see the opposite. They ever make it easy."
Well, we saw the bounce. So, do we sell off from here? The Fed does not like to disappoint the market but they have a chance to give it to us straight, and can we trust them to do so? As we mentioned yesterday, the Fed got it wrong in a big way last year at this Jackson Hole Symposium when they were confident that inflation was "transitory." Do they have the fortitude this time to give us the real scoop, or do they want to hide the reality of the situation so as to not crush the stock market?
I don't have the answers and of course they know better than I do, but are they willing to give it to us straight?
A wider look at the S&P 500 in 2022 shows that we saw a lot of these kind of rallies that looked very promising, stop on a dime and reverse course. That's what the red arrows below show. There has been a big bounce off the lows, but the major downtrend is still intact.
More upside this morning may be possible since mom and pop are seeing yesterday's spike, and that could be the place where "they", whoever they are, pull the rug out from under the indices, and the small guy gets trapped again. Otherwise, I am completely barking up the wrong tree, but I have been programmed over the years to expect the unexpected.
I look at the fundamental picture as kind of a mess right now, but the stock market isn't always looking at right now, but rather 6 months or more down the road, and perhaps it sees something that we're (or at least I'm) not seeing.
Yesterday the 2-year Treasury Note yield was up near 3.4%. The 10-year T-note closed just over 3.0%. That's a whopper of an inverted yield curve and that is not generally painting a good economic picture, so why would stocks rally? Why would we ever expect a move up near the old highs when things are much worse then they were a year ago?
Today we will get some very interesting economic data and the PCE Prices report may rival the CPI as the top indicator for the inflation situation.
The S&P 500 (C-fund) has had a nice 2-day rally heading into today's Jackson Hole Symposium and that was enough to inch it back above that 200-day EMA, but that 200-day MA (orange) failed rather easily this month and in a bear market, that's about were we'd expect the indices to fail. The question is, are we still in a bear market? The open gap at 4219 is getting close to being filled and we know that can be a lure, so maybe that all this recent bounce is all about - filling that gap.
BND (Bonds / F-fund) also rallied as we saw yields move down, but this chart has been following the S&P 500 chart fairly closely, and perhaps it is also just looking to fill that overhead open gap? That support near 74.60 looks pretty good, but I said yesterday, there's not a lot of support below that so it has to hold.
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 for reading. I appreciate it. Have a great weekend!
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.
