Stocks celebrated solid Magnificent 7 earnings from Microsoft and Alphabet on Friday as technology led the rally. The PCE Prices report came in a little hotter than expected on the personal consumption side, but yields didn't didn't rally and stocks were able to resume the bounce off the recent lows, after Thursday's shake out sell off. It's a very busy week filled with catalysts, so buckle up.
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First things first; as of this writing, early on Sunday, I haven't seen any indications of how the market is going to react to the first bank failure of 2024. They snuck that news in late Friday that the Republic First Bank was closing down. There's a lot going on and we'll just have to see how much investors are worried about this. Typically 4 or 5 banks close each year in the US so it may just be another day at the office, but you may recall the tantrum the market had after the Silicon Valley Bank closure in March of 2023. More on the RFB closure
This is going to be a busy week. More Mag 7 earnings are coming with Amazon reporting after the bell on Tuesday, and Apple reports on Thursday. Regarding Apple, that means the market won't react until he market opens again on Friday morning, which will be an hour after the April jobs report comes, so that will be a busy day. There is also a two day FOMC meeting this week ending on Wednesday, although no interest rate changes are expected, but anytime they open their mouths it can create volatility. That's a lot of catalysts!
The 10-year Treasury Yield was actually down slightly on Friday despite the fact that inflation in March was not showing signs of cooling. Perhaps the move up in yield leading up to the PCE report on Friday has priced in the sticky inflation. Again, inflation is slowing compared to the lofty levels in 2022, but it is still rising at a faster pace than the Fed would like. Yields are getting uncomfortably high again. The 4.7% area may be a pivot point.
The longer term chart shows that there is an open gap up around 4.77% with other resistance in that area. It could be all that's left to hold it back from hitting 5% again.
I know I have been a little maniacal about the S&P 500 following the July - August 2023 path, but it's hard to deny the similarities in the chart. I won't get too detailed but we are seeing some decent action as the moving averages are starting to be recaptured, but if the pattern is to continue, I think we could see more upside, but then perhaps a roadblock near the bottom of the negative outside reversal bar. (NOR = negative outside reversal.) The top chart is from 2023.
If the pattern continues there could be some tough resistance near 5150. If it can get past that it would be golden for the bulls, but the bears are going to be in attack mode at that resistance.
The weekly chart of the S&P 500 shows how the 2024 rally overshot the top of the ascending trading channel. It happens but it usually corrects eventually, and that's what we've seen in recent weeks. If the action is typical, it wouldn't be far fetched to assume that some of those old red breakout lines will get tested again, like we saw in 2023. In the short-term however, the bulls have the ball with a little momentum again, but the bears may have the technical charts on their side for a bit longer.
The Dow Transportation Index, one of the major market leaders, has been struggling. It did not rally on Friday so that's a negative divergence. It did however close back above the January low after breaking down earlier this month. It failed at the 200-day moving average after being a strong area of support going back to last November.
So we have a busy week and that could mean that volatility picks up again. Tomorrow is the last trading day in April and that will end the stronger 6-month period for stocks for the year (November - April), and the calls for Sell in May and go away will start on Wednesday. Will the Fed's FOMC meeting trigger that or keep the rally going?
The S&P 500 (C-fund) is back above the 15 and 50-day moving averages after a couple of weeks below them. So far this looking pretty good coming off the lows at the 100-day average. It is starting to look more like a "V" bottom low but as I pointed out in the S&P chart in the top sections, there are some concerns between here and 5150.
DWCPF (S-fund) lagged a bit on Friday and, although it led the TSP funds for week, it has been a rough month of April for the small caps index. It has bounced nicely off the lows but there is a lot of resistance just overhead, so it has some work to do this week to get out of trouble.
EFA (I-fund) has been holding key support and on Friday it broke back above the 30 and 50-day EMAs again. There is an open gap near 79 and that could be an upside target, but it still needs to get out of this congested area of moving average resistance. If the bull flag on the dollar (UUP) chart breaks out the way they tend to do, it will be tough for EFA to move forward with any authority.
BND (Bonds / F-fund) was up on Friday but this has been a mess as yields continue to be sticky high. The bear flag broke down on Thursday abut it seems to be back in the flag now after Friday's rally. Maybe that was a double bottom?
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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First things first; as of this writing, early on Sunday, I haven't seen any indications of how the market is going to react to the first bank failure of 2024. They snuck that news in late Friday that the Republic First Bank was closing down. There's a lot going on and we'll just have to see how much investors are worried about this. Typically 4 or 5 banks close each year in the US so it may just be another day at the office, but you may recall the tantrum the market had after the Silicon Valley Bank closure in March of 2023. More on the RFB closure
This is going to be a busy week. More Mag 7 earnings are coming with Amazon reporting after the bell on Tuesday, and Apple reports on Thursday. Regarding Apple, that means the market won't react until he market opens again on Friday morning, which will be an hour after the April jobs report comes, so that will be a busy day. There is also a two day FOMC meeting this week ending on Wednesday, although no interest rate changes are expected, but anytime they open their mouths it can create volatility. That's a lot of catalysts!
The 10-year Treasury Yield was actually down slightly on Friday despite the fact that inflation in March was not showing signs of cooling. Perhaps the move up in yield leading up to the PCE report on Friday has priced in the sticky inflation. Again, inflation is slowing compared to the lofty levels in 2022, but it is still rising at a faster pace than the Fed would like. Yields are getting uncomfortably high again. The 4.7% area may be a pivot point.
The longer term chart shows that there is an open gap up around 4.77% with other resistance in that area. It could be all that's left to hold it back from hitting 5% again.
I know I have been a little maniacal about the S&P 500 following the July - August 2023 path, but it's hard to deny the similarities in the chart. I won't get too detailed but we are seeing some decent action as the moving averages are starting to be recaptured, but if the pattern is to continue, I think we could see more upside, but then perhaps a roadblock near the bottom of the negative outside reversal bar. (NOR = negative outside reversal.) The top chart is from 2023.
If the pattern continues there could be some tough resistance near 5150. If it can get past that it would be golden for the bulls, but the bears are going to be in attack mode at that resistance.
The weekly chart of the S&P 500 shows how the 2024 rally overshot the top of the ascending trading channel. It happens but it usually corrects eventually, and that's what we've seen in recent weeks. If the action is typical, it wouldn't be far fetched to assume that some of those old red breakout lines will get tested again, like we saw in 2023. In the short-term however, the bulls have the ball with a little momentum again, but the bears may have the technical charts on their side for a bit longer.
The Dow Transportation Index, one of the major market leaders, has been struggling. It did not rally on Friday so that's a negative divergence. It did however close back above the January low after breaking down earlier this month. It failed at the 200-day moving average after being a strong area of support going back to last November.
So we have a busy week and that could mean that volatility picks up again. Tomorrow is the last trading day in April and that will end the stronger 6-month period for stocks for the year (November - April), and the calls for Sell in May and go away will start on Wednesday. Will the Fed's FOMC meeting trigger that or keep the rally going?
The S&P 500 (C-fund) is back above the 15 and 50-day moving averages after a couple of weeks below them. So far this looking pretty good coming off the lows at the 100-day average. It is starting to look more like a "V" bottom low but as I pointed out in the S&P chart in the top sections, there are some concerns between here and 5150.
DWCPF (S-fund) lagged a bit on Friday and, although it led the TSP funds for week, it has been a rough month of April for the small caps index. It has bounced nicely off the lows but there is a lot of resistance just overhead, so it has some work to do this week to get out of trouble.
EFA (I-fund) has been holding key support and on Friday it broke back above the 30 and 50-day EMAs again. There is an open gap near 79 and that could be an upside target, but it still needs to get out of this congested area of moving average resistance. If the bull flag on the dollar (UUP) chart breaks out the way they tend to do, it will be tough for EFA to move forward with any authority.
BND (Bonds / F-fund) was up on Friday but this has been a mess as yields continue to be sticky high. The bear flag broke down on Thursday abut it seems to be back in the flag now after Friday's rally. Maybe that was a double bottom?
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.
