Stocks continued their post-holiday rally, living up to the July historical seasonality chart's expectation, even in a bear market where every other month had struggled in the first half of the month in 2022. The Dow gained 347-points on Thursday and we are starting to see crooked number moves again as the Nasdaq and small caps both gained over 2% on the day. Yields were up, as was the price of oil, which is interesting because stocks started to bounce off the lows when these were pulling back.
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The July seasonality chart was trying to tell us to get aggressive in the first half of the month, but that was a little tough to do given the results of the first six month of the year. Things do change in the middle of the month which will be at the end of next week, which happens to be about when earnings season kicks in. next week is also an options expiration week.
Chart provided courtesy of www.sentimentrader.com
The yield on the 10-year Treasury Note followed through on Wednesday's positive outside reversal day with another gains, which is what it was supposed to do, and it also got back above the 50-day EMA. The fact that stocks rallied so much yesterday while this was happening is interesting since stocks have been applauding the recent decline in yields. So which is it? Are rising yields good or bad for stocks?
How about oil? The stock market was enjoying a relief rally while watching the price of oil breakdown and crash back below $100 a barrel, but yesterday it bounced back to close near $103, and stocks were unphased.
The price of oil recently peaked on June 14th and the S&P 500 made its closing low on the 16th a couple days later. So yesterday's action was a head scratcher for either stocks, oil, or both.
I have the normal S&P 500 chart down below but this one is a close up showing the bear flag and open gaps more clearly. Given where the 50-day EMA and the large open gap converge, the 4000 - 4020 area looks like a possible upside target. That would still satisfy the bear flag pattern and could be a trouble area. On the downside there is a much smaller open gap by 3700, and since bear flags tend to break down, filling that gap is certainly still a possibility.
So it could be a traders market while the charts, and many look similar, work their way through the gaps, bear flags, and moving averages. Expect the market to do the unexpected, but filling gaps is one of the more reliable moves the indices make.
The Jobs report will come out this morning before the opening bell and the estimates are looking for a gain of about 250,000 jobs and an unemployment rate of 3.6%.
The S&P 500 (C-fund) chart is seeing a decent bounce off the lows but as I highlighted in the S&P chart up above, there is a series of issues the closer it gets to 4000, and it's now less than 100 points away. 100-points is a decent move and can be worth the play, but we came into this month having seen better opportunities in the second half of each month this year. Will that continue in July?
The DWCPF (S-fund) chart is in a very similar technical situation as the S&P 500 chart. The difference between the two may be that the losses in the small caps this year have been more severe, and if we do happen to be seeing a bottom being formed, this one could outperform on the way up. The counter argument is that small caps tend to underperform in rising interest rate environments.
EFA (I-fund) opened another gap yesterday, this one of the downside with two still open up above. There's some short-term resistance right near yesterday's close but the more serious resistance may be closer to 65 - 67, if it can get through 62.
BND (Bonds / F-fund) was down again and it looks like 74.75 - 75.00 is going to be an interesting test of support to let us know if the recent rally was for real, or just an overshoot above resistance and another selling opportunity. I'd say if the bottom of that open gap and / or the old descending resistance line can hold it would be a tell that bonds are ready for a playable bounce. Playable that is, as an alternative to the G-fund.
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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The July seasonality chart was trying to tell us to get aggressive in the first half of the month, but that was a little tough to do given the results of the first six month of the year. Things do change in the middle of the month which will be at the end of next week, which happens to be about when earnings season kicks in. next week is also an options expiration week.
Chart provided courtesy of www.sentimentrader.com
The yield on the 10-year Treasury Note followed through on Wednesday's positive outside reversal day with another gains, which is what it was supposed to do, and it also got back above the 50-day EMA. The fact that stocks rallied so much yesterday while this was happening is interesting since stocks have been applauding the recent decline in yields. So which is it? Are rising yields good or bad for stocks?
How about oil? The stock market was enjoying a relief rally while watching the price of oil breakdown and crash back below $100 a barrel, but yesterday it bounced back to close near $103, and stocks were unphased.
The price of oil recently peaked on June 14th and the S&P 500 made its closing low on the 16th a couple days later. So yesterday's action was a head scratcher for either stocks, oil, or both.
I have the normal S&P 500 chart down below but this one is a close up showing the bear flag and open gaps more clearly. Given where the 50-day EMA and the large open gap converge, the 4000 - 4020 area looks like a possible upside target. That would still satisfy the bear flag pattern and could be a trouble area. On the downside there is a much smaller open gap by 3700, and since bear flags tend to break down, filling that gap is certainly still a possibility.
So it could be a traders market while the charts, and many look similar, work their way through the gaps, bear flags, and moving averages. Expect the market to do the unexpected, but filling gaps is one of the more reliable moves the indices make.
The Jobs report will come out this morning before the opening bell and the estimates are looking for a gain of about 250,000 jobs and an unemployment rate of 3.6%.
The S&P 500 (C-fund) chart is seeing a decent bounce off the lows but as I highlighted in the S&P chart up above, there is a series of issues the closer it gets to 4000, and it's now less than 100 points away. 100-points is a decent move and can be worth the play, but we came into this month having seen better opportunities in the second half of each month this year. Will that continue in July?
The DWCPF (S-fund) chart is in a very similar technical situation as the S&P 500 chart. The difference between the two may be that the losses in the small caps this year have been more severe, and if we do happen to be seeing a bottom being formed, this one could outperform on the way up. The counter argument is that small caps tend to underperform in rising interest rate environments.
EFA (I-fund) opened another gap yesterday, this one of the downside with two still open up above. There's some short-term resistance right near yesterday's close but the more serious resistance may be closer to 65 - 67, if it can get through 62.
BND (Bonds / F-fund) was down again and it looks like 74.75 - 75.00 is going to be an interesting test of support to let us know if the recent rally was for real, or just an overshoot above resistance and another selling opportunity. I'd say if the bottom of that open gap and / or the old descending resistance line can hold it would be a tell that bonds are ready for a playable bounce. Playable that is, as an alternative to the G-fund.
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.
