It was a quiet Monday before this week's storm of inflation data, the FOMC meeting, an important 30-year bond auction, but once again a weak open was bought by the dip buyers, and the bears are really nowhere to be found once that opening bell rings. The gains weren't huge but after consolidating for a week or so, the indices are grinding higher again while the bears sit on the sidelines, whether patiently or just dumbfounded by the strength. Will the busy data week change that or is it all clear into the end of the year?
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So the bulls pulled off another positive reversal as the bears opened the indices lower but the bulls showed up -- or did they?
The NYSE and the Nasdaq were both up nicely yesterday but actually the advancing issues were about the same as the declining, and the volume favored the decliners.
We can take this a couple of ways. Either internally the market isn't as strong as the indices are showing, or this is the pullback and it's not going to show up in the indices. I wish I knew because those are two completely different angles.
Let's take the Nasdaq 100, which are the largest tech stocks. It was up 0.85% yesterday, but ironically it wasn't the Magnificent 7 pulling up the index.
Here are the top 10 weighted stocks in the Nasdaq 100 Index. 8 of the 10 were negative yesterday, but the 6th heaviest weighted stock, Broadcom, was up 9% on the day, which helped carry the index, but there's more to the story.
I took a look at the top 50, and after those top 10, number 11 through 50 were all positive on the day. All of them.
That's some conflicting data sets. We have the largest tech stock index leading, with the top 10 in the index lagging, except for Broadcom and Adobe, and that left the advance / decline number oddly flat and in the case of share volume, on the negative side.
What this means going foreword, I'm not sure, but the broader and smaller companies are being favored, so perhaps that rotation may continue to favor the S-fund into the end of the year.
Small caps rely heavily on financing so interest rates are key, and maybe it's too early to declare victory in front of this week's busy interest rate sensitive data, CPI and PPI, and the FOMC meeting coming up.
The 10-year Treasury Yield was up early, breaking through resistance, but it reversed after a noon bond auction. The negative reversal had it landing back on the broken resistance line, which could now act as support. Today there will be a 30-year bond auction and it could be a market mover as we find out the demand for holding debt.
The dollar was up again. It's not screaming higher but the UUP chart is back above its 50-day EMA and starting to creep into that large open gap from mid-November.
Oracle was down sharply after reporting earnings after the bell yesterday. I was surprised to see that they are not part of the Nasdaq 100, but they are they 38th most heavily weighted stock of the 500 stocks in the S&P 500 Component list. It probably won't be much of a factor, but it will have some impact.
Not a whole lot going on but it may start getting more noisy today with the CPI kicking things off before the opening bell.
The S&P 500 (C-fund) had a nice looking sideways consolidation which started just before Thanksgiving, and just recently broke out of it. The bulls are in charge but the move above the July highs will either bring in more money into the market from those who have been trying to be patient and waiting for a pullback, or it could be a trap by tagging the stop orders from the bears who are short the market (betting against it) forcing them to buy, and that can often create an exhaustion move up that eventually reverses, and we're in that area now. I'm still thinking a right shoulder may have to get formed before a major breakout occurs.
Smalls caps (S-fund) and the EFA (I-fund) were both up moderate yesterday and there's no change in those situations to report.
BND (Bonds / F-fund) was flat yesterday but it battled back from the morning losses after yields reversed lower. There's now a small overhead open gap and depending on how you draw your trend lines, we may have had a minor breakdown in the ascending trading channel yesterday.
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
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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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So the bulls pulled off another positive reversal as the bears opened the indices lower but the bulls showed up -- or did they?
The NYSE and the Nasdaq were both up nicely yesterday but actually the advancing issues were about the same as the declining, and the volume favored the decliners.
We can take this a couple of ways. Either internally the market isn't as strong as the indices are showing, or this is the pullback and it's not going to show up in the indices. I wish I knew because those are two completely different angles.
Let's take the Nasdaq 100, which are the largest tech stocks. It was up 0.85% yesterday, but ironically it wasn't the Magnificent 7 pulling up the index.
Here are the top 10 weighted stocks in the Nasdaq 100 Index. 8 of the 10 were negative yesterday, but the 6th heaviest weighted stock, Broadcom, was up 9% on the day, which helped carry the index, but there's more to the story.
I took a look at the top 50, and after those top 10, number 11 through 50 were all positive on the day. All of them.
That's some conflicting data sets. We have the largest tech stock index leading, with the top 10 in the index lagging, except for Broadcom and Adobe, and that left the advance / decline number oddly flat and in the case of share volume, on the negative side.
What this means going foreword, I'm not sure, but the broader and smaller companies are being favored, so perhaps that rotation may continue to favor the S-fund into the end of the year.
Small caps rely heavily on financing so interest rates are key, and maybe it's too early to declare victory in front of this week's busy interest rate sensitive data, CPI and PPI, and the FOMC meeting coming up.
The 10-year Treasury Yield was up early, breaking through resistance, but it reversed after a noon bond auction. The negative reversal had it landing back on the broken resistance line, which could now act as support. Today there will be a 30-year bond auction and it could be a market mover as we find out the demand for holding debt.
The dollar was up again. It's not screaming higher but the UUP chart is back above its 50-day EMA and starting to creep into that large open gap from mid-November.
Oracle was down sharply after reporting earnings after the bell yesterday. I was surprised to see that they are not part of the Nasdaq 100, but they are they 38th most heavily weighted stock of the 500 stocks in the S&P 500 Component list. It probably won't be much of a factor, but it will have some impact.
Not a whole lot going on but it may start getting more noisy today with the CPI kicking things off before the opening bell.
The S&P 500 (C-fund) had a nice looking sideways consolidation which started just before Thanksgiving, and just recently broke out of it. The bulls are in charge but the move above the July highs will either bring in more money into the market from those who have been trying to be patient and waiting for a pullback, or it could be a trap by tagging the stop orders from the bears who are short the market (betting against it) forcing them to buy, and that can often create an exhaustion move up that eventually reverses, and we're in that area now. I'm still thinking a right shoulder may have to get formed before a major breakout occurs.
Smalls caps (S-fund) and the EFA (I-fund) were both up moderate yesterday and there's no change in those situations to report.
BND (Bonds / F-fund) was flat yesterday but it battled back from the morning losses after yields reversed lower. There's now a small overhead open gap and depending on how you draw your trend lines, we may have had a minor breakdown in the ascending trading channel yesterday.
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.
