Stocks opened modestly higher on Thursday, chopped about for a while, but just before lunch the bulls took full control and we saw explosive gains in most of the major indices. The Dow gained 614-points, and that was actually well off the high, but +1.85% nonetheless. The Nasdaq gained over 3% and the S&P picked up 2.5%. Small caps had an interesting day despite lagging a bit. There was a rare positive outside reversal day created on the chart, which is usually a very good sign. Bonds were flat and the dollar... up again!
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The dollar continues its run higher and this type of action can be a headwind to earnings for companies like Apple or Coke who do a lot of their business overseas.
Yesterday reminded us that there are playable rallies in bears markets, but after the bell we were also reminded that we are still in a bear market. The futures will be quite negative overnight - they opened down about 1% on Thursday evening - so yesterday's rally will be tested immediately today. Will the bulls who missed the rally start buying any pullback action today, or will we see profit taking from those who made money on Thursday?
We talked about the S&P 500 (C-fund) above.
DWCPF (S-fund / small caps) gained over 2% yesterday, but it also created a positive outside reversal day, which is a rare event, and can be the sign of a major reversal. The outside reversal means it made a lower low on Thursday compared to Wednesday, but also made a higher high and closed above Wednesday's high. There's no guarantees in the stock market but this is as bullish of a signal as we generally see as a potential. Too bad this will have to deal with Amazon and Apple today and possibly negate this strong pattern. The Russell 2000 small caps futures were holding up fairly well when they opened Thursday evening. They were down just 0.2% compared to about 1.0% for the S&P 500 futures.
The EFA (I-fund) had a nice gain but once again a big rally in the dollar was a drag here.
BND (bonds / F-fund) was down a bit and I don't have much to say about bonds unless you like trying to catch falling knives.
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. Have a great weekend!
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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We had a big rally across the board yesterday and the S&P had a rare triple digit gain, but unfortunately that wasn't the biggest news of the day. We head into Friday after Amazon disappointed with earnings after the bell on Thursday, and was down 10%. That's a big move for that behemoth. Intel also disappointed and this was setting up a possible reversal of yesterday's gains on Friday.
Apple had a chance to save the day, and they posted a strong report about a half hour after Amazon and Intel reported, and were trading up about 2% initially after hours, but those early gains were slipping and as of this writing were down over 3%, although they are still holding onto some of Thursday's 4.5% gain... so far.
The negative reversal in Apple after hours doesn't bode well for today, at least for the start, because that was one hope the market had in order to overlook the awful action in Amazon, but the news is fluid as the earnings conference call continued. They don't usually give guidance for future quarters but they are blaming supply chain issues for a possible revenue slow down in the future. However, they are notorious for underestimating their future business.
The S&P 500 was up about 125-points at the highs yesterday, closed up 104, and after the earnings rolled out after the bell, the futures were up just 80 at the futures close at 5 PM ET, so there was a lot of selling from the 3:30 PM ET peak to the close of the futures market.
We were due for something like we saw yesterday. We're still in a bear market atmosphere but we know how explosive rallies can be in bear markets. Investors are now going to have to interpret what yesterday was. Was it a bear market rally? A bounce off the lows? A fourth successful hold at the 2022 lows (S&P) that will head back up to the top of its range? The end of the bear market?
Taking a look at the S&P 500 (C-fund) chart we can see the move off of some key support, so the after hours downward reversal will put a damper on the bounce - at least initially We can see in February and March that the first moves off of 4150 did fail a couple of times before finding their footing and finally rebounding back toward the top of the range. Can that happen happen again, or is the bear still in control?Apple had a chance to save the day, and they posted a strong report about a half hour after Amazon and Intel reported, and were trading up about 2% initially after hours, but those early gains were slipping and as of this writing were down over 3%, although they are still holding onto some of Thursday's 4.5% gain... so far.
The negative reversal in Apple after hours doesn't bode well for today, at least for the start, because that was one hope the market had in order to overlook the awful action in Amazon, but the news is fluid as the earnings conference call continued. They don't usually give guidance for future quarters but they are blaming supply chain issues for a possible revenue slow down in the future. However, they are notorious for underestimating their future business.
The S&P 500 was up about 125-points at the highs yesterday, closed up 104, and after the earnings rolled out after the bell, the futures were up just 80 at the futures close at 5 PM ET, so there was a lot of selling from the 3:30 PM ET peak to the close of the futures market.
We were due for something like we saw yesterday. We're still in a bear market atmosphere but we know how explosive rallies can be in bear markets. Investors are now going to have to interpret what yesterday was. Was it a bear market rally? A bounce off the lows? A fourth successful hold at the 2022 lows (S&P) that will head back up to the top of its range? The end of the bear market?
The dollar continues its run higher and this type of action can be a headwind to earnings for companies like Apple or Coke who do a lot of their business overseas.
Yesterday reminded us that there are playable rallies in bears markets, but after the bell we were also reminded that we are still in a bear market. The futures will be quite negative overnight - they opened down about 1% on Thursday evening - so yesterday's rally will be tested immediately today. Will the bulls who missed the rally start buying any pullback action today, or will we see profit taking from those who made money on Thursday?
We talked about the S&P 500 (C-fund) above.
DWCPF (S-fund / small caps) gained over 2% yesterday, but it also created a positive outside reversal day, which is a rare event, and can be the sign of a major reversal. The outside reversal means it made a lower low on Thursday compared to Wednesday, but also made a higher high and closed above Wednesday's high. There's no guarantees in the stock market but this is as bullish of a signal as we generally see as a potential. Too bad this will have to deal with Amazon and Apple today and possibly negate this strong pattern. The Russell 2000 small caps futures were holding up fairly well when they opened Thursday evening. They were down just 0.2% compared to about 1.0% for the S&P 500 futures.
The EFA (I-fund) had a nice gain but once again a big rally in the dollar was a drag here.
BND (bonds / F-fund) was down a bit and I don't have much to say about bonds unless you like trying to catch falling knives.
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. Have a great weekend!
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.
