Stocks were very choppy on Monday and traded in a fairly tight range in front of this busy week for Wall Street. The Dow managed a solid 91-point gain despite being negative with less than 30 minutes to go in the trading day, so investors and traders are jockeying for position in front of this important week which really gets started with Microsoft and Alphabet (Google) reporting after the bell today. The S&P was up slightly and the Nasdaq down modestly, while the S-fund posted a solid again, but the I-fund led the TSP funds on the day. Bonds pulled back after Friday's breakout.
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Earnings from big tech will certainly set the tone, but the results may vary for each of these companies creating a push me, pull me reaction but of course the Fed's decision on interest rates tomorrow will be the keynote of the week. Today could be another tentative day like yesterday, although you can always get some front-running and rumors to get people leaning one way or the other, but it will be tough to trust any of the action.
After the bell yesterday Wal-Mart announced a lower profit outlook for their Q2 and the stock was down 9% in after hours trading, which was also dragging down other retail stocks in sympathy. They said food inflation was double digits in Q2.
As we have talked about before, earnings estimates may be too high because, while investors have considered inflation, they may not have adjusted estimates based on the Fed's impact on the economy with their aggressive rate hikes. That's why this earnings season is so critical, not only because companies may or may not hit estimates, but will they provide optimistic guidance for future quarters, or will they use the economy as an excuse to lower expectations, like Wal-Mart just did? The "P" in P/E ratio stands for price, and prices have to come down if the "E"s (earnings) are coming down because of slower economic growth.
The 10-year Treasury yield was trying to inch higher into Friday's big open gap but the chart looks bearish for yields as it seems to be pricing in a slowdown in the economy. Lower yields could mean support for the F-fund, once it fills its open gap.
BND (F-fund) was down with yields moving up yesterday, as both charts try to fill their open gaps.
The price of oil bounced back $2 a barrel on Monday but the chart remains in a downtrend so the battle continues between the support from the 200-day EMA and the descending resistance line.
This next chart doesn't have a whole lot to do with what we do, but rather the energy sector in general. The price of natural gas has been very volatile lately falling nearly 50% in less than a month, and since the lows in early July, it has almost recovered all of those losses already. Whiplash!
That's all for today. I don't want to speculate too much. I'm playing defense right now but maybe the Fed and earnings will surprise all of us - who knows. Being in stocks now is a gamble, but so is being on the sidelines if stocks race higher this week. You just have to evaluate your hand, place your bets, and see what cards are dealt next.
The S&P 500 (C-fund) was up slightly but it took a rally in the final minutes to get it there, and you can see all of the resistance in the 4000 area. That said, a break to the upside can be powerful if it can manage to break through but, in a normal less busy week on Wall Street, the path of least resistance would be to the downside. There is an open gap still in the 3800 area, which is 167 below yesterday's close.
The DWCPF (S-fund) managed to close above the 50-day EMA but that bearish flag is still there and the top of that parallel formation is meaningful resistance. If the 50-day EMA can't hold, 1600 would be in the picture again.
EFA (I-fund) is still below some key resistance in the form of the 50-day EMA, the prior June high and, a little higher up, the longer-term descending resistance line. The Fed action and commentary that follows could have the power to move this sharply in either direction. I don't see a case for that much good news, but the market is never short of surprises.
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. We'll see you back here tomorrow.
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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Earnings from big tech will certainly set the tone, but the results may vary for each of these companies creating a push me, pull me reaction but of course the Fed's decision on interest rates tomorrow will be the keynote of the week. Today could be another tentative day like yesterday, although you can always get some front-running and rumors to get people leaning one way or the other, but it will be tough to trust any of the action.
After the bell yesterday Wal-Mart announced a lower profit outlook for their Q2 and the stock was down 9% in after hours trading, which was also dragging down other retail stocks in sympathy. They said food inflation was double digits in Q2.
As we have talked about before, earnings estimates may be too high because, while investors have considered inflation, they may not have adjusted estimates based on the Fed's impact on the economy with their aggressive rate hikes. That's why this earnings season is so critical, not only because companies may or may not hit estimates, but will they provide optimistic guidance for future quarters, or will they use the economy as an excuse to lower expectations, like Wal-Mart just did? The "P" in P/E ratio stands for price, and prices have to come down if the "E"s (earnings) are coming down because of slower economic growth.
The 10-year Treasury yield was trying to inch higher into Friday's big open gap but the chart looks bearish for yields as it seems to be pricing in a slowdown in the economy. Lower yields could mean support for the F-fund, once it fills its open gap.
BND (F-fund) was down with yields moving up yesterday, as both charts try to fill their open gaps.
The price of oil bounced back $2 a barrel on Monday but the chart remains in a downtrend so the battle continues between the support from the 200-day EMA and the descending resistance line.
This next chart doesn't have a whole lot to do with what we do, but rather the energy sector in general. The price of natural gas has been very volatile lately falling nearly 50% in less than a month, and since the lows in early July, it has almost recovered all of those losses already. Whiplash!
That's all for today. I don't want to speculate too much. I'm playing defense right now but maybe the Fed and earnings will surprise all of us - who knows. Being in stocks now is a gamble, but so is being on the sidelines if stocks race higher this week. You just have to evaluate your hand, place your bets, and see what cards are dealt next.
The S&P 500 (C-fund) was up slightly but it took a rally in the final minutes to get it there, and you can see all of the resistance in the 4000 area. That said, a break to the upside can be powerful if it can manage to break through but, in a normal less busy week on Wall Street, the path of least resistance would be to the downside. There is an open gap still in the 3800 area, which is 167 below yesterday's close.
The DWCPF (S-fund) managed to close above the 50-day EMA but that bearish flag is still there and the top of that parallel formation is meaningful resistance. If the 50-day EMA can't hold, 1600 would be in the picture again.
EFA (I-fund) is still below some key resistance in the form of the 50-day EMA, the prior June high and, a little higher up, the longer-term descending resistance line. The Fed action and commentary that follows could have the power to move this sharply in either direction. I don't see a case for that much good news, but the market is never short of surprises.
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. We'll see you back here tomorrow.
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.
