Stocks opened sharply higher on Monday, only to get the rug pulled out from them by the afternoon. The Dow was up 356-point at the highs and closed down 216-points. News out of Apple turned the tide and for now, Friday's big rally looks like a one day wonder, although headline moves can be short-lived so we can only wait and see. Small caps held up as they went after big tech hard because Apple was involved. Bonds were down and oil is back near $100 a barrel. The dollar fell and that helped the I-fund hold onto some early gains.
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The market loves to confuse us. After last week when we had the worst inflation data in 50 years come out, stocks were wobbly but they held above the June lows as a sign of strength, and then we got a big boost higher on Friday. So on Monday mom and pop probably jumped in during the morning rally, and "they" take the indices down sharply with nearly a 2% reversal. By "they" I mean Wall Street.
Yesterday Apple was the excuse for selling yesterday and as I mentioned in yesterday's commentary, "As goes Apple", and "it is flirting with some stiff resistance near $152." It was up 1% and got as high as 151.57 in early trading before reversing and closing near 147 for a 2% loss, and a 3% reversal off that high. The move came after a headline that their Smartphone shipments were down 9% in Q2.
How much money was shifted across the world on that news?
Technically the morning started with gap up and I thought maybe the afternoon selling was going to be an attempt to fill that gap, but it just kept going down. The next thing we know, a 40-point S&P gain turns into a 32-point loss, so it was nearly a 2% swing.
The question now is, was the reaction to Apple's headline an over reaction, or a warning that the market is going to be vulnerable to Q2 earnings reports? That was not an Apple earnings report, just a headline, so perhaps earnings warnings will be setting up a sell the rumor buy the news (the actual earnings) reaction? Who knows, but this is a bear market and I guess we shouldn't be surprised by bearish action. It's just that the relief rallies have been so pathetic and most people are waiting for the big short covering rally that goes further than anyone expects. We haven't seen that quite yet, expect maybe a little of that in March.
It was a pretty frustrating day for me as I got caught in the storm. The bottom line is that we had a pathway higher after some better action in the indices by not making lower lows last week despite the dismal economic data. But the folks on Wall Street won't make it easy on anyone trying to figure things out in the short term.
Earnings will start coming in heavier over the next two weeks and the Fed will be raising rates next week so the action could be steered by investors positioning for that news. Traders will try to push us around and try to get us leaning the wrong way, which they did a good job of doing in the last two days. If they appear to want us to be selling, maybe that means buying into this weakness is the better play? I'm just thinking out loud.
The S&P 500 (C-fund) gapped up, slammed into a short term resistance line and flipped over. It didn't make it to the 50-day EMA, let alone the open gap at 4017. Now it is trying to hold onto the 20-day EMA (green) which it has been dancing above and below for weeks. I didn't draw it in but the bear flag is still in play.
The DWCPF (S-fund) held up a little better as the large tech stocks seemed to be the target of yesterday afternoon's selling after the Apple news.
EFA (I-fund) also gave up some big early gains but because of the late selling in U.S. stocks, and the weakness in the dollar, this fund held onto some gains.
BND (Bonds / F-fund) was down yesterday as it continues to negotiate that 50-day EMA and the bull flag. The bull flag suggests a move higher, but this is a long term bear market and the bears may not go away easily.
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 loves to confuse us. After last week when we had the worst inflation data in 50 years come out, stocks were wobbly but they held above the June lows as a sign of strength, and then we got a big boost higher on Friday. So on Monday mom and pop probably jumped in during the morning rally, and "they" take the indices down sharply with nearly a 2% reversal. By "they" I mean Wall Street.
Yesterday Apple was the excuse for selling yesterday and as I mentioned in yesterday's commentary, "As goes Apple", and "it is flirting with some stiff resistance near $152." It was up 1% and got as high as 151.57 in early trading before reversing and closing near 147 for a 2% loss, and a 3% reversal off that high. The move came after a headline that their Smartphone shipments were down 9% in Q2.
How much money was shifted across the world on that news?
Technically the morning started with gap up and I thought maybe the afternoon selling was going to be an attempt to fill that gap, but it just kept going down. The next thing we know, a 40-point S&P gain turns into a 32-point loss, so it was nearly a 2% swing.
The question now is, was the reaction to Apple's headline an over reaction, or a warning that the market is going to be vulnerable to Q2 earnings reports? That was not an Apple earnings report, just a headline, so perhaps earnings warnings will be setting up a sell the rumor buy the news (the actual earnings) reaction? Who knows, but this is a bear market and I guess we shouldn't be surprised by bearish action. It's just that the relief rallies have been so pathetic and most people are waiting for the big short covering rally that goes further than anyone expects. We haven't seen that quite yet, expect maybe a little of that in March.
It was a pretty frustrating day for me as I got caught in the storm. The bottom line is that we had a pathway higher after some better action in the indices by not making lower lows last week despite the dismal economic data. But the folks on Wall Street won't make it easy on anyone trying to figure things out in the short term.
Earnings will start coming in heavier over the next two weeks and the Fed will be raising rates next week so the action could be steered by investors positioning for that news. Traders will try to push us around and try to get us leaning the wrong way, which they did a good job of doing in the last two days. If they appear to want us to be selling, maybe that means buying into this weakness is the better play? I'm just thinking out loud.
The S&P 500 (C-fund) gapped up, slammed into a short term resistance line and flipped over. It didn't make it to the 50-day EMA, let alone the open gap at 4017. Now it is trying to hold onto the 20-day EMA (green) which it has been dancing above and below for weeks. I didn't draw it in but the bear flag is still in play.
The DWCPF (S-fund) held up a little better as the large tech stocks seemed to be the target of yesterday afternoon's selling after the Apple news.
EFA (I-fund) also gave up some big early gains but because of the late selling in U.S. stocks, and the weakness in the dollar, this fund held onto some gains.
BND (Bonds / F-fund) was down yesterday as it continues to negotiate that 50-day EMA and the bull flag. The bull flag suggests a move higher, but this is a long term bear market and the bears may not go away easily.
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.
