Monday's positive reversal, on light volume as we noted, didn't hold for a minute yesterday, so no Turnaround Tuesday this week as we headed into big earnings after the bell yesterday with another major sell off in the indices, and the selling was very broad. The Dow lost 809-points with more crooked number losses in the other indices and the small caps of the S-fund's index closed at a new low for 2022.
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I take that as any rally off these earnings could easily set up a sell the rally situation, but a breakdown to new lows could set up a capitulation like reversal low.
Again, by low I mean a playable low. The stock market could be down all year for all we know, but trading the ups and downs is still possible - tough yes - but doable because stocks don't usually go straight up, or straight down. I say that a little less confidently because the Covid crash and recovered defied that generality.
Visa posted good numbers and was rallying strongly, but that is not the market mover of the other two.
The weakening economic data may be strike three for stocks after rate hikes and inflation. The Atlanta Fed just lowered their GDP estimates for the first quarter.
From atlantafed.org: First-Quarter GDP Growth Estimate Decreases:
On April 26, the GDPNow model estimate for real GDP growth in the first quarter of 2022 is 0.4 percent, down from 1.3 percent on April 19.
https://www.atlantafed.org/cqer/research/gdpnow.aspx
We'll get earnings after the bell today from Meta (aka Facebook), and on Thursday Apple and Amazon, and of course the Fed's rate hike next week, and I am sure they are cringing watching the market tank before they make their 2nd of many scheduled hikes in 2022 and 2023.
They probably want to crawl under a rock after spending last year talking about "transitory" inflation, and because they didn't act until last month, inflation is getting away from them. How will they explain this and how can they ease the concerns about the economy or the stock market? That's the trick for a week from today when they announce their new policy statement.
It may get worse before it gets better, but it will get better. – Mike Rawlings
The S&P 500 (C-fund) is back to the bottom of its 2022 range after another major sell off on Tuesday. A breakdown is possible, and it could either trigger a new leg lower, or it could be a fake-out to take out the stops below the support line, followed buy a rally back into the range. Unfortunately the more you knock on a door, the more likely someone will eventually answer it, and this chart has been knocking on that 4250 door a lot this year.
DWCPF (S-fund / small caps) is also at the bottom of its range. It could turn out to be another low. It could be a trap door ready to open. The VIX is quite elevated so the swings in both directions could be wide as bargain hunters battle panic sellers.
The EFA (I-fund) is not at its lows yet and that's a little surprising considering the big rally in the dollar recently.
BND (bonds / F-fund) is back in its trading range after a fake out on the down side. We saw a few upside fake out moves this year as well so I'd be careful trying to trigger off of breakouts from the trend. It may be a better fade.
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. We'll see you back here tomorrow.
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.
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The market was anticipating the first of the big wave of tech earnings, and apparently expectations were low as we saw another major sell off in tech stocks before those reports came out.
Alphabet (GOOG) didn't excite the market after the bell yesterday as it was trading down after hours, but MSFT saw some buying late in the after hours session with so, so earnings, but good guidance going forward. Neither may be market reversing moves, but maybe that's good because we may need it to get bad before it gets good?
The title to RevShark's opening commentary yesterday may be what we're in for, and that was:
"A Poor Reaction To Major Earnings May Be The Best Way To Fix This Market"Alphabet (GOOG) didn't excite the market after the bell yesterday as it was trading down after hours, but MSFT saw some buying late in the after hours session with so, so earnings, but good guidance going forward. Neither may be market reversing moves, but maybe that's good because we may need it to get bad before it gets good?
The title to RevShark's opening commentary yesterday may be what we're in for, and that was:
I take that as any rally off these earnings could easily set up a sell the rally situation, but a breakdown to new lows could set up a capitulation like reversal low.
Again, by low I mean a playable low. The stock market could be down all year for all we know, but trading the ups and downs is still possible - tough yes - but doable because stocks don't usually go straight up, or straight down. I say that a little less confidently because the Covid crash and recovered defied that generality.
Visa posted good numbers and was rallying strongly, but that is not the market mover of the other two.
The weakening economic data may be strike three for stocks after rate hikes and inflation. The Atlanta Fed just lowered their GDP estimates for the first quarter.
From atlantafed.org: First-Quarter GDP Growth Estimate Decreases:
On April 26, the GDPNow model estimate for real GDP growth in the first quarter of 2022 is 0.4 percent, down from 1.3 percent on April 19.
https://www.atlantafed.org/cqer/research/gdpnow.aspx
We'll get earnings after the bell today from Meta (aka Facebook), and on Thursday Apple and Amazon, and of course the Fed's rate hike next week, and I am sure they are cringing watching the market tank before they make their 2nd of many scheduled hikes in 2022 and 2023.
They probably want to crawl under a rock after spending last year talking about "transitory" inflation, and because they didn't act until last month, inflation is getting away from them. How will they explain this and how can they ease the concerns about the economy or the stock market? That's the trick for a week from today when they announce their new policy statement.
It may get worse before it gets better, but it will get better. – Mike Rawlings
The S&P 500 (C-fund) is back to the bottom of its 2022 range after another major sell off on Tuesday. A breakdown is possible, and it could either trigger a new leg lower, or it could be a fake-out to take out the stops below the support line, followed buy a rally back into the range. Unfortunately the more you knock on a door, the more likely someone will eventually answer it, and this chart has been knocking on that 4250 door a lot this year.
DWCPF (S-fund / small caps) is also at the bottom of its range. It could turn out to be another low. It could be a trap door ready to open. The VIX is quite elevated so the swings in both directions could be wide as bargain hunters battle panic sellers.
The EFA (I-fund) is not at its lows yet and that's a little surprising considering the big rally in the dollar recently.
BND (bonds / F-fund) is back in its trading range after a fake out on the down side. We saw a few upside fake out moves this year as well so I'd be careful trying to trigger off of breakouts from the trend. It may be a better fade.
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. We'll see you back here tomorrow.
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.
