The bulls are not giving up easily as the bears showed their teeth for most of the day yesterday, but the bulls battled back and took the S&P 500 and Nasdaq back into positive territory by the close. The Dow came back from a 200+ point loss to close nearly positive, but it was negative and that's now 6 down days in the last 7. Bonds moved up on a dip in yields as another Fed member gave some comments, this time more dovish.
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For a couple of decades the CPI report came in under the radar as inflation was not a problem. Now the market lives and breathes for these inflation numbers and today before the opening bell we will get the CPI.
The estimate for the core CPI is a gain of 0.3% over the prior month, and that would bring the annual rate down to 3.7% from 3.8%. That's higher than the 2% inflation level the Fed is eying, but it is an improvement, and the market may jump or rollover based on whether this lands above, below, or even with these estimates.
Yesterday it was Atlanta Fed President Bostic that commented on inflation and interest rates. While he did say he's sees one rate cut this year, which is not what the stocks market wants to hear, he did leave the door open to more or fewer cuts based on the data, and he said today's data could tip that one way or the other.
Here is the CPI through last month's report. It is still above any level from 2011 through 2020, but the core has been steadily moving down in recent months so any change in direction there could be consequential.
The 10-year Treasury Yield was down yesterday in front of the CPI report, which was optimistic from investors who have been anticipating good news on the inflation front. The chart's inverted head & shoulders pattern may be disagreeing with them as it suggests higher yields and the neckline held again yesterday.
The dollar was down slightly yesterday but once again it found support at its 20-day EMA, which has held for most of the year, save that dip in the first part of March that, like the 10-year yield, was the head of an inverted head and shoulders pattern.
As I have been saying for the last week, the negative outside reversal day last Thursday is meaningful but will the data override that typically bearish formation? The comparison to the 2023 peak is still alive and well.
The price of oil was down about a half dollar yesterday but remains in a strong uptrend. Gold is making all-time highs and silver is also on the move. Bitcoin pulled back yesterday but it's not far from its all time highs made last month.
OK, get ready for the CPI report (Consumer Price Index.) It will be out before the opening bell today. But don't get comfortable. The PPI is right on its tail tomorrow, and it has has become just as influential as the CPI.
The S&P 500 (C-fund) is still trading within last Thursday negative outside reversal day but the fireworks should begin after today and / or tomorrow's inflation data. It has been very resilient and the bulls are not budging, but the bears see the set up for a potential failure up here.
DWCPF (S-fund) has been leading again lately as support held up on another pullback. This looks good but the top of last Thursday's candlestick could act as resistance.
The EFA (I-fund) is also hanging tough up here near the highs. It's behaving as if it wants to go higher but the dollar isn't behaving (too strong) and the I-fund may need some help from the dollar to get above 80.
BND (Bonds / F-fund) surprised me with a bounce back above the 50-day EMA yesterday after a couple of closes below it, but it is still below the broken support line.
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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For a couple of decades the CPI report came in under the radar as inflation was not a problem. Now the market lives and breathes for these inflation numbers and today before the opening bell we will get the CPI.
The estimate for the core CPI is a gain of 0.3% over the prior month, and that would bring the annual rate down to 3.7% from 3.8%. That's higher than the 2% inflation level the Fed is eying, but it is an improvement, and the market may jump or rollover based on whether this lands above, below, or even with these estimates.
Yesterday it was Atlanta Fed President Bostic that commented on inflation and interest rates. While he did say he's sees one rate cut this year, which is not what the stocks market wants to hear, he did leave the door open to more or fewer cuts based on the data, and he said today's data could tip that one way or the other.
Here is the CPI through last month's report. It is still above any level from 2011 through 2020, but the core has been steadily moving down in recent months so any change in direction there could be consequential.
The 10-year Treasury Yield was down yesterday in front of the CPI report, which was optimistic from investors who have been anticipating good news on the inflation front. The chart's inverted head & shoulders pattern may be disagreeing with them as it suggests higher yields and the neckline held again yesterday.
The dollar was down slightly yesterday but once again it found support at its 20-day EMA, which has held for most of the year, save that dip in the first part of March that, like the 10-year yield, was the head of an inverted head and shoulders pattern.
As I have been saying for the last week, the negative outside reversal day last Thursday is meaningful but will the data override that typically bearish formation? The comparison to the 2023 peak is still alive and well.
The price of oil was down about a half dollar yesterday but remains in a strong uptrend. Gold is making all-time highs and silver is also on the move. Bitcoin pulled back yesterday but it's not far from its all time highs made last month.
OK, get ready for the CPI report (Consumer Price Index.) It will be out before the opening bell today. But don't get comfortable. The PPI is right on its tail tomorrow, and it has has become just as influential as the CPI.
The S&P 500 (C-fund) is still trading within last Thursday negative outside reversal day but the fireworks should begin after today and / or tomorrow's inflation data. It has been very resilient and the bulls are not budging, but the bears see the set up for a potential failure up here.
DWCPF (S-fund) has been leading again lately as support held up on another pullback. This looks good but the top of last Thursday's candlestick could act as resistance.
The EFA (I-fund) is also hanging tough up here near the highs. It's behaving as if it wants to go higher but the dollar isn't behaving (too strong) and the I-fund may need some help from the dollar to get above 80.
BND (Bonds / F-fund) surprised me with a bounce back above the 50-day EMA yesterday after a couple of closes below it, but it is still below the broken support line.
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.
