Stocks rolled over on what was apparently disappointment over the election, but also a 30% decline in the price of bitcoin this week has added to the downside pressure. The Dow lost 647-points closing near the lows of the day, and a rebound in the dollar sent prices lower almost across the board. The question now is what the CPI report this morning (Thursday) will do. It could really send the market down sharply, or it could turn it around. There's a lot of possibilities but I hate the idea of one rear-view mirror report having such an impact.
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We had a confluence of negative news yesterday as far as the market was concerned. The election did not turn out exactly as Wall Street had anticipated and if it was pricing in a sweep of the House and Senate by the Republicans, yesterday was doing some re-pricing.
Also, Binance nixed a deal with FTX in the crypto world and that sent bitcoin reeling for a second straight day, and it traded down to the $15,000's, which is down about 30% in just three days. That puts it down over 75% from its highs from this time last year.
Who cares, is the likely reaction from most people when it comes to bitcoin, but to Wall Street that creates a potential liquidity problem as accounts in the cryptos shrink, and that includes some major financial institutions. I'll also remind you that the stock market peaked in January of this year, about a month after bitcoin peaked at $68,000.
Today we'll get the all important CPI report it will give investors the lowdown on inflation - at least through October.
I'll repeat this from Wednesday commentary: The estimates for the CPI is a gain of 0.7%, and for the Core CPI +0.5%. The year over year CPI in September was 8.2% and that may be the benchmark for October's report. The Core CPI, which excludes food and energy - probably the largest hindrance to consumers, was up 6.6% in September.
So, it will be all about that today, unless bitcoin is having another monster move in one direction or the other. We could also get word on some of the close election races that haven't been called yet, so there are some catalysts to watch for.
The dollar was up 0.75% which is a big one day move and the bull flag that we have been watching remains intact for at least another day as it bounced off the bottom of the flag yesterday. If technical analysis is a roadmap, this chart would be suggesting a move higher in the dollar in the coming days so that may tell us something about what the CPI report will look like - hot?
Here's where the CPI report will be released at 8:30 AM ET if you want to see some of the nuts and bolts: https://www.bls.gov/cpi/
Admin Note: Friday is Veteran's Day and a Federal Holiday so the TSP will be closed and not processing transactions that day. That means I will be taking the day off as well and won't be posting a commentary on Friday, nor will the premium services be updated.
The S&P 500 (C-fund) reversed down and remains in that large bear flag, and on a smaller scale broke down from a tiny bear flag yesterday. 3700 - 3675 looks like potential support levels that have to hold otherwise a breakdown from the bear flag has some pretty low targets. On the upside, yesterday's large candle could get some backing and filling attention but the 50-day EMA is now back overhead and potential resistance.
The DWCPF (small caps / S-fund) is in the same situation, flirting with the bottom of a bear flag and below its 50-day EMA.
The EFA (I-fund) held up slightly better and found support at the top of one of the bear flags. Today's action is obviously key in keeping this technical picture on the healthy side. A move below about 60.50 would be a red flag.
BND (bonds / F-fund) was up slightly with yields choppy for most of the day. Another small bear flag has developed, but it remains above key support.
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 so much for reading. Have a great holiday weekend, and thank you to all of the veterans out there for your service to our country!
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 confluence of negative news yesterday as far as the market was concerned. The election did not turn out exactly as Wall Street had anticipated and if it was pricing in a sweep of the House and Senate by the Republicans, yesterday was doing some re-pricing.
Also, Binance nixed a deal with FTX in the crypto world and that sent bitcoin reeling for a second straight day, and it traded down to the $15,000's, which is down about 30% in just three days. That puts it down over 75% from its highs from this time last year.
Who cares, is the likely reaction from most people when it comes to bitcoin, but to Wall Street that creates a potential liquidity problem as accounts in the cryptos shrink, and that includes some major financial institutions. I'll also remind you that the stock market peaked in January of this year, about a month after bitcoin peaked at $68,000.
Today we'll get the all important CPI report it will give investors the lowdown on inflation - at least through October.
I'll repeat this from Wednesday commentary: The estimates for the CPI is a gain of 0.7%, and for the Core CPI +0.5%. The year over year CPI in September was 8.2% and that may be the benchmark for October's report. The Core CPI, which excludes food and energy - probably the largest hindrance to consumers, was up 6.6% in September.
So, it will be all about that today, unless bitcoin is having another monster move in one direction or the other. We could also get word on some of the close election races that haven't been called yet, so there are some catalysts to watch for.
The dollar was up 0.75% which is a big one day move and the bull flag that we have been watching remains intact for at least another day as it bounced off the bottom of the flag yesterday. If technical analysis is a roadmap, this chart would be suggesting a move higher in the dollar in the coming days so that may tell us something about what the CPI report will look like - hot?
Here's where the CPI report will be released at 8:30 AM ET if you want to see some of the nuts and bolts: https://www.bls.gov/cpi/
Admin Note: Friday is Veteran's Day and a Federal Holiday so the TSP will be closed and not processing transactions that day. That means I will be taking the day off as well and won't be posting a commentary on Friday, nor will the premium services be updated.
The S&P 500 (C-fund) reversed down and remains in that large bear flag, and on a smaller scale broke down from a tiny bear flag yesterday. 3700 - 3675 looks like potential support levels that have to hold otherwise a breakdown from the bear flag has some pretty low targets. On the upside, yesterday's large candle could get some backing and filling attention but the 50-day EMA is now back overhead and potential resistance.
The DWCPF (small caps / S-fund) is in the same situation, flirting with the bottom of a bear flag and below its 50-day EMA.
The EFA (I-fund) held up slightly better and found support at the top of one of the bear flags. Today's action is obviously key in keeping this technical picture on the healthy side. A move below about 60.50 would be a red flag.
BND (bonds / F-fund) was up slightly with yields choppy for most of the day. Another small bear flag has developed, but it remains above key support.
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 so much for reading. Have a great holiday weekend, and thank you to all of the veterans out there for your service to our country!
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.
