Stimulus efforts in China helped stocks open higher yesterday, but soon after the opening bell Consumer Confidence data pulled stocks back. Stocks then traded rather flat, but positive toward the close, before a late push higher sent the indices solidly in the black. China's stock market soared on their stimulus announcement, which could turn out to be global stimulus.
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The end result was new closing highs in the Dow and S&P 500. The Nasdaq led yesterday but it is still below its all time high levels from July, and small caps lagged a bit and are trying to hang around their recent highs.
But it was the stimulus in China that set the tone yesterday, and you can see what happened to China's Shanghai Index yesterday as it rallied up over 4% and broke right through a couple of levels of resistance. Selling rallies in the Chinese market has been the play this year, but this looks different and the talk is that this could bleed into the global markets. Keep an eye on this new development to see if it sticks or if the bear market here resumes after the relief rally.
The bad new yesterday was the disappointment in the Consumer Confidence Report as it fell well short of estimates and the trend continues to be down since the pre-COVID peak. It was the largest one-month decline in more than three years.
The 10-Year Treasury Yield was down slightly on the day after gapping up initially on the China news. The weak consumer confidence data took the steam out of the rally in yields and by the close it was testing Monday's lows again.
The dollar also fell on the disappointing Consumer data and the chart looks like the overhead resistance is going to continue to put pressure on it. A weaker dollar will help stock prices to some extent, particularly the I-fund. Gold and silver continue to rally with the help of the weakening dollar.
A little follow up to the Transportation index which plummeted off the triple top last week after FedEx reported earnings. Investor must have a short memory because they were buying both FedEx (up 3.2%) and the Transports enthusiastically yesterday.
Fed governor Bowman has been speaking out about why she dissented from the 0.50% rate cut decision saying she is still concerned about inflation. We get the key PCE Prices inflation data on Friday, and that will be a big tell, but probably more important will be next week's jobs report.
The S&P 500 (C-fund) closed at a new all-time high yesterday - again with some thanks to the stimulus in China. Whether that stimulus will have holding power to China's beaten down market remains to be seen. The early selling after the Consumer Confidence report was released led to the creation of a small positive outside reversal day as the index closed above Monday's high. September gains have been impressive, and that has been magnified by the negative expectations of September and October's seasonal records. But will October be as friendly when the gloves really come off before the election?
The DWCPF (S-fund) closed with a modest gain but the sideways consolidation continued after last week's Fed driven rally to new 2024 highs. The open gaps are obvious below but does the new dovish Fed outlook void the typical response of filling those gaps?
The EFA was up 0.59% yesterday and the new "ex USA ex China ex Hong Kong Index" was up 0.69%, so I would expect an I-fund return for Tuesday to be somewhere between the two, although there may be some fair value added after Monday's price.
A little follow up to Monday's action where we said, "The EFA was up 0.38% yesterday and the new "ex USA ex China ex Hong Kong Index" was up 0.40% when the US markets closed, so I would expect an I-fund price for Monday to be right in that area."
The I-fund was eventually given a return of +0.26% for Monday. That might be explained by Monday's late move higher in US stocks, so that is why I say we may see some positive fair value added and we may see a return of over 0.70% for the I-fund on Tuesday.
We're still in limbo on the I-fund's transformation to the new components so guessing at the return before the TSP posts the price is a little tough a the moment. You will see the final price and return posted on our site by Monday evening. Here's more information from tsp.gov.
BND (F-fund) did not disappoint the bond investors as the the chart bounced right off of that rising 20-day EMA for a nice little gain. The trend remains positive.
Thanks so much for reading! We'll see you 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
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
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.
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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[TD="width: 311, align: center"] Daily TSP Funds Return
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The end result was new closing highs in the Dow and S&P 500. The Nasdaq led yesterday but it is still below its all time high levels from July, and small caps lagged a bit and are trying to hang around their recent highs.
But it was the stimulus in China that set the tone yesterday, and you can see what happened to China's Shanghai Index yesterday as it rallied up over 4% and broke right through a couple of levels of resistance. Selling rallies in the Chinese market has been the play this year, but this looks different and the talk is that this could bleed into the global markets. Keep an eye on this new development to see if it sticks or if the bear market here resumes after the relief rally.
The bad new yesterday was the disappointment in the Consumer Confidence Report as it fell well short of estimates and the trend continues to be down since the pre-COVID peak. It was the largest one-month decline in more than three years.
The 10-Year Treasury Yield was down slightly on the day after gapping up initially on the China news. The weak consumer confidence data took the steam out of the rally in yields and by the close it was testing Monday's lows again.
The dollar also fell on the disappointing Consumer data and the chart looks like the overhead resistance is going to continue to put pressure on it. A weaker dollar will help stock prices to some extent, particularly the I-fund. Gold and silver continue to rally with the help of the weakening dollar.
A little follow up to the Transportation index which plummeted off the triple top last week after FedEx reported earnings. Investor must have a short memory because they were buying both FedEx (up 3.2%) and the Transports enthusiastically yesterday.
Fed governor Bowman has been speaking out about why she dissented from the 0.50% rate cut decision saying she is still concerned about inflation. We get the key PCE Prices inflation data on Friday, and that will be a big tell, but probably more important will be next week's jobs report.
The S&P 500 (C-fund) closed at a new all-time high yesterday - again with some thanks to the stimulus in China. Whether that stimulus will have holding power to China's beaten down market remains to be seen. The early selling after the Consumer Confidence report was released led to the creation of a small positive outside reversal day as the index closed above Monday's high. September gains have been impressive, and that has been magnified by the negative expectations of September and October's seasonal records. But will October be as friendly when the gloves really come off before the election?
The DWCPF (S-fund) closed with a modest gain but the sideways consolidation continued after last week's Fed driven rally to new 2024 highs. The open gaps are obvious below but does the new dovish Fed outlook void the typical response of filling those gaps?
The EFA was up 0.59% yesterday and the new "ex USA ex China ex Hong Kong Index" was up 0.69%, so I would expect an I-fund return for Tuesday to be somewhere between the two, although there may be some fair value added after Monday's price.
A little follow up to Monday's action where we said, "The EFA was up 0.38% yesterday and the new "ex USA ex China ex Hong Kong Index" was up 0.40% when the US markets closed, so I would expect an I-fund price for Monday to be right in that area."
The I-fund was eventually given a return of +0.26% for Monday. That might be explained by Monday's late move higher in US stocks, so that is why I say we may see some positive fair value added and we may see a return of over 0.70% for the I-fund on Tuesday.
We're still in limbo on the I-fund's transformation to the new components so guessing at the return before the TSP posts the price is a little tough a the moment. You will see the final price and return posted on our site by Monday evening. Here's more information from tsp.gov.
BND (F-fund) did not disappoint the bond investors as the the chart bounced right off of that rising 20-day EMA for a nice little gain. The trend remains positive.
Thanks so much for reading! We'll see you 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
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
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.
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.
