A downgrade of Apple helped trigger some selling in big tech yesterday and that weighed heavily on many of the indices, although a late rally did push the Dow into positive territory. Small caps started the day with relative strength but gave way by the close day to lag and lose over 1% on the day. It was a weak start to the new year in bonds as well, as yields and the dollar rallied and were a drag on the stock market but will yesterday's action be a turning point, or just a needed rest from the recent rally in stocks and bonds?
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modest loss after two months of gains doesn't sound like anything to be concerned about, but as we talked about repeatedly last week, the start of the new year is often to be a tell for the rest of the year. Another loss today and I might have to repost the 1999-2000 chart. It's a different world since back then, but the current chart looks quite similar to that eras change in direction.
Here's the possible change in direction in the 10-year Treasury Yield, although it is still within the clear descending trading channel and a pullback today will keep the downtrend intact.
The dollar also jumped higher yesterday with a big gap up, but it is also below some key resistance. Is this the new year, new direction phenomenon, or is it just testing the top of the channel? That is a big question for the future of the stock market.
As I talked about yesterday, the stock and bond markets seemed to have priced in several interest rate cuts from the Fed already, and if that has been overly aggressive, they will have to adjustment to more reasonable expectations from the Fed, and that could be bearish for stocks and bonds
The 2 year / 10 year yield curve is still inverted and, as we have talked about for nearly two years now, that is usually an indication of an economic slowdown at best, and more typically, a recession. As for the stock market, it tends to do poorly when the yield curve is steepening (reversing from the inverted levels) but so far we haven't seen that, although it is still inverted - just off its worst levels.
We've talked about "as goes January", but we also have to revisit "as goes Apple" because the market has been following Apple's strength and weakness for a long time, and yesterday Apple broke down below its December lows, and historically when the S&P 500 falls below the Decembers lows in the new year, it is often warning sign. However, the S&P 500 has a long way to go before testing its December lows so either there is going to be a decoupling between the two... or there could be a stock market problem coming up.
We will get the December Jobs Report on Friday and estimates are looking for a gain of approximately 162,000 new jobs and an unemployment rate of 3.8%.
I started the 2024 Guess the Dow Contest. The 2023 winner, Joblin20, received $100 Amazon e-Gift Card for guessing that the Dow would end 2023 the year at 37,55, and it closed at 37,650. If you want to get in on the 2024 contest, you can post your guess in the Forum by this coming Sunday evening. See this post for more information. [url]https://www.tsptalk.com/mb/site-news-and-announcements/41743-guess-dow-contest-2024-a.html
[/URL]
And while I'm at it, I forgot to mentioned the 2023 AutoTracker Winners who had some crazy good returns last year.
And you you can follow the leaders to see where their money is going, and when they are making the moves with the Last Look Report service. More on that: Last Look Report.
Here's more details on the 2023 winners. https://www.tsptalk.com/mb/autotracker-monthly-contest/41739-2023-final-autotracker-winners.html#post694185
TSP Talk is celebrating its 20th anniversary this month as I uploaded the first TSP Talk Market Commentary back in January of 2004. The Way Back Machine has our January 15, 2004 daily commentary as our earliest commentary, although I'm quite sure that wasn't the first one. Take a look if you want a peak back in time...
TSP Talk - Thrift Savings Plan Strategies
The S&P 500 (C-fund) pulled back and is flirting with a possible break in the rising support line, which wouldn't be the end of the world as the channel needs to widen to become sustainable. It's only day two of the pullback that started just below the 2021 all time highs (not shown.) Double top pullbacks are nothing new, but the question is always, how far can it fall? There is room on the downside to about 4580 to 4550 that could keep the bulls happy despite a pullback as this chart has come a long way in a short amount of time.
DWCPF (S-fund) is flirting with a breakdown from its two month long ascending channel and perhaps we'll finally see one of the meaningfully sized open gaps get filled. There's plenty more of those below, although I didn't mark them on the chart. Let's see if this first one gets addressed before worrying about the ones well below which would be a much more serious problem for the stock market.
EFA (I-fund) was down hard with the big rally in the dollar yesterday. The UUP ETF dollar chart up above showed us that this move up is within the downtrend and is not an issue yet, but this chart below has now broken its channel and as volatile as this I-fund chart can get, a move down to test the 50-day EMA wouldn't be too unusual.
BND (bonds / F-fund) was down sharply and it too is testing the lower end of its ascending trading channel so it will be tested again today. If it breaks here there is a lot of room below with several open gaps as possible downside targets. But if it holds, it would be on a path to test the recent highs again.
Thanks so much for reading! We'll see you back here tomorrow.
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.
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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[TD="width: 338, align: center"] Daily TSP Funds Return
[TR]
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modest loss after two months of gains doesn't sound like anything to be concerned about, but as we talked about repeatedly last week, the start of the new year is often to be a tell for the rest of the year. Another loss today and I might have to repost the 1999-2000 chart. It's a different world since back then, but the current chart looks quite similar to that eras change in direction.
Here's the possible change in direction in the 10-year Treasury Yield, although it is still within the clear descending trading channel and a pullback today will keep the downtrend intact.
The dollar also jumped higher yesterday with a big gap up, but it is also below some key resistance. Is this the new year, new direction phenomenon, or is it just testing the top of the channel? That is a big question for the future of the stock market.
As I talked about yesterday, the stock and bond markets seemed to have priced in several interest rate cuts from the Fed already, and if that has been overly aggressive, they will have to adjustment to more reasonable expectations from the Fed, and that could be bearish for stocks and bonds
The 2 year / 10 year yield curve is still inverted and, as we have talked about for nearly two years now, that is usually an indication of an economic slowdown at best, and more typically, a recession. As for the stock market, it tends to do poorly when the yield curve is steepening (reversing from the inverted levels) but so far we haven't seen that, although it is still inverted - just off its worst levels.
We've talked about "as goes January", but we also have to revisit "as goes Apple" because the market has been following Apple's strength and weakness for a long time, and yesterday Apple broke down below its December lows, and historically when the S&P 500 falls below the Decembers lows in the new year, it is often warning sign. However, the S&P 500 has a long way to go before testing its December lows so either there is going to be a decoupling between the two... or there could be a stock market problem coming up.
We will get the December Jobs Report on Friday and estimates are looking for a gain of approximately 162,000 new jobs and an unemployment rate of 3.8%.
I started the 2024 Guess the Dow Contest. The 2023 winner, Joblin20, received $100 Amazon e-Gift Card for guessing that the Dow would end 2023 the year at 37,55, and it closed at 37,650. If you want to get in on the 2024 contest, you can post your guess in the Forum by this coming Sunday evening. See this post for more information. [url]https://www.tsptalk.com/mb/site-news-and-announcements/41743-guess-dow-contest-2024-a.html
[/URL]
And while I'm at it, I forgot to mentioned the 2023 AutoTracker Winners who had some crazy good returns last year.
And you you can follow the leaders to see where their money is going, and when they are making the moves with the Last Look Report service. More on that: Last Look Report.
Here's more details on the 2023 winners. https://www.tsptalk.com/mb/autotracker-monthly-contest/41739-2023-final-autotracker-winners.html#post694185
TSP Talk is celebrating its 20th anniversary this month as I uploaded the first TSP Talk Market Commentary back in January of 2004. The Way Back Machine has our January 15, 2004 daily commentary as our earliest commentary, although I'm quite sure that wasn't the first one. Take a look if you want a peak back in time...
TSP Talk - Thrift Savings Plan Strategies
The S&P 500 (C-fund) pulled back and is flirting with a possible break in the rising support line, which wouldn't be the end of the world as the channel needs to widen to become sustainable. It's only day two of the pullback that started just below the 2021 all time highs (not shown.) Double top pullbacks are nothing new, but the question is always, how far can it fall? There is room on the downside to about 4580 to 4550 that could keep the bulls happy despite a pullback as this chart has come a long way in a short amount of time.
DWCPF (S-fund) is flirting with a breakdown from its two month long ascending channel and perhaps we'll finally see one of the meaningfully sized open gaps get filled. There's plenty more of those below, although I didn't mark them on the chart. Let's see if this first one gets addressed before worrying about the ones well below which would be a much more serious problem for the stock market.
EFA (I-fund) was down hard with the big rally in the dollar yesterday. The UUP ETF dollar chart up above showed us that this move up is within the downtrend and is not an issue yet, but this chart below has now broken its channel and as volatile as this I-fund chart can get, a move down to test the 50-day EMA wouldn't be too unusual.
BND (bonds / F-fund) was down sharply and it too is testing the lower end of its ascending trading channel so it will be tested again today. If it breaks here there is a lot of room below with several open gaps as possible downside targets. But if it holds, it would be on a path to test the recent highs again.
Thanks so much for reading! We'll see you back here tomorrow.
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.
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.
