A negative open brought in some dip buyers yesterday, but that didn't last long and it was more of a grind for the bulls all day. The Dow lost 154-points and many indices closed in negative territory on the day, but the small caps and the I-fund eked out a gain. Bonds were up early but an ugly negative reversal seems to be hinting that yields are going to continue to move higher. The dollar pulled back and that changed up the pricing action in almost everything - except stock prices.
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All eyes are on Jerome Powell's upcoming speech from the Jackson Hole Symposium on Friday and the market has been very tentative as investors want to hear something dovish out of the Federal Reserve Chair, but they are not expecting it. That can sometimes set up a contrarian outcome and a, "expect the worst, hope for the best" analysis, but there is certainly a lot of guessing going on all day long by us financial pundits.
The dollar once again set the tone yesterday after a morning pullback from the double top lifted prices in stocks and commodities, but it did bounce off its lows after filling the most immediate open gap near 29, and we saw prices come off their highs, and in the case of some of the stock indices, into negative territory.
The price of oil, gold, silver, copper, corn, wheat, bitcoin, all up with the help of that 0.39% decline in the dollar yesterday.
The yield on the 10-year Treasury inched up again as that test of the head of the head and shoulders pattern continues to play out.
The 10-year being back above 3% and higher oil prices are some of the biggest concerns right now since having them both pull back sharply over the last two months ignited the recent rally off the lows in stocks. Now those two seem to be reversing back up, and perhaps the bear market rally is done?
Oil closed above its 20-day EMA yesterday for the first time since June, and a couple of resistance lines were also taken out. The 200-day EMA (not shown) is at 94.66 and yesterday's high was 94.22 so that test may be coming today.
Nordstrom reported earnings after the bell yesterday and gave concerning guidance well below what Wall Street was anticipating, and it was trading down about 13% immediately in after hours trading on that reaction. Not a market mover, but that could give us a sense of where high end retail is in this economic environment.
Nvidia reports earnings after the bell today and that could shake up the Nasdaq for Thursday.
Things don't look all that great on the surface, and most people understand this, but rarely does the market reward the side where everyone is leaning. So while I'm on the cautious side, I wouldn't be surprised by a positive outcome in the coming weeks. I haven't bet on the positive side yet, but we have 6 more trading days in August to make changes to our allocation. The Fed could change the tone on Friday but of course we'd have to place our "bets" by Thursday morning if we want to take that chance.
The S&P 500 (C-fund) has fallen hard since failing at the 200-day moving average last week. "Hard" is relative because the S&P had run up about 18% off the June lows, so this recent pullback only takes it back to where it was in the first week of August. There's a lot of support just under 4100 but the Fed will have the ability to really disappoint investors if they go into full hawkish mode on us.
The DWCPF (S-fund) was up yesterday but it gave up a pretty decent morning gain by the close. It had failed at its 200-day EMA and has already fallen below some tough support, with the 50-day EMA less than 20 points below yesterday's close. Below 1725 there isn't a whole lot of support until 1625 so the risk / reward is getting more risky here.
EFA (I-fund) was also up and the decline in the dollar helped. The low of the last two days is testing the low from May, which could be meaningful, but if that fails, a test of the June lows could be in the cards.
BND (Bonds / F-fund) looked like it had every opportunity to break to the upside but the bull flag just continued too rollover, and yesterday's negative outside reversal day is not a great technical sign. Like the EFA above, the May low may be the next test here.
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. I appreciate it. 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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[TD="width: 338, align: center"] Daily TSP Funds Return
[TR]
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All eyes are on Jerome Powell's upcoming speech from the Jackson Hole Symposium on Friday and the market has been very tentative as investors want to hear something dovish out of the Federal Reserve Chair, but they are not expecting it. That can sometimes set up a contrarian outcome and a, "expect the worst, hope for the best" analysis, but there is certainly a lot of guessing going on all day long by us financial pundits.
The dollar once again set the tone yesterday after a morning pullback from the double top lifted prices in stocks and commodities, but it did bounce off its lows after filling the most immediate open gap near 29, and we saw prices come off their highs, and in the case of some of the stock indices, into negative territory.
The price of oil, gold, silver, copper, corn, wheat, bitcoin, all up with the help of that 0.39% decline in the dollar yesterday.
The yield on the 10-year Treasury inched up again as that test of the head of the head and shoulders pattern continues to play out.
The 10-year being back above 3% and higher oil prices are some of the biggest concerns right now since having them both pull back sharply over the last two months ignited the recent rally off the lows in stocks. Now those two seem to be reversing back up, and perhaps the bear market rally is done?
Oil closed above its 20-day EMA yesterday for the first time since June, and a couple of resistance lines were also taken out. The 200-day EMA (not shown) is at 94.66 and yesterday's high was 94.22 so that test may be coming today.
Nordstrom reported earnings after the bell yesterday and gave concerning guidance well below what Wall Street was anticipating, and it was trading down about 13% immediately in after hours trading on that reaction. Not a market mover, but that could give us a sense of where high end retail is in this economic environment.
Nvidia reports earnings after the bell today and that could shake up the Nasdaq for Thursday.
Things don't look all that great on the surface, and most people understand this, but rarely does the market reward the side where everyone is leaning. So while I'm on the cautious side, I wouldn't be surprised by a positive outcome in the coming weeks. I haven't bet on the positive side yet, but we have 6 more trading days in August to make changes to our allocation. The Fed could change the tone on Friday but of course we'd have to place our "bets" by Thursday morning if we want to take that chance.
The S&P 500 (C-fund) has fallen hard since failing at the 200-day moving average last week. "Hard" is relative because the S&P had run up about 18% off the June lows, so this recent pullback only takes it back to where it was in the first week of August. There's a lot of support just under 4100 but the Fed will have the ability to really disappoint investors if they go into full hawkish mode on us.
The DWCPF (S-fund) was up yesterday but it gave up a pretty decent morning gain by the close. It had failed at its 200-day EMA and has already fallen below some tough support, with the 50-day EMA less than 20 points below yesterday's close. Below 1725 there isn't a whole lot of support until 1625 so the risk / reward is getting more risky here.
EFA (I-fund) was also up and the decline in the dollar helped. The low of the last two days is testing the low from May, which could be meaningful, but if that fails, a test of the June lows could be in the cards.
BND (Bonds / F-fund) looked like it had every opportunity to break to the upside but the bull flag just continued too rollover, and yesterday's negative outside reversal day is not a great technical sign. Like the EFA above, the May low may be the next test here.
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. I appreciate it. 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.
