Stocks were slightly higher yesterday, although small caps lagged and closed lower, as investors nervously, but eagerly await Nvidia's earnings as the market looks for the next catalyst. Will they deliver? Trading volume has been light as the summer vacations continue into labor Day weekend. Seasonality gets bearish in September although there is a window of strength for the bulls before the worst kicks in.
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I mentioned the semiconductors yesterday as a possible leader for the next bigger move and yesterday the sector had a solid day, gaining over 1% as investors await Nvidia. The chart has been coiling in recent days for some kind of move as the chart hovers above key support. Nvidia will likely break this chart one way or the other, but there's one more trading day before Nvidia reports tonight after the closing bell.
It's not at its all time highs from May, but Nvidia is up about 40% off the August low already. It has a decent looking bullish flag but so as of now it is making a 2nd lower high. Expectations are very high and they must easily beat estimates and probably raise guidance for their next quarter, to rally from here.
The 10-year Treasury Yield (3.83%) was up modestly yesterday, while the 2-year Yield (3.91) was down and that yield curve inversion is once again threatening to flatten out, steepen, and "de-invert." That sounds good since the inversion often precedes a recession, but the steepening tends to come when the economy is weakening and the Fed is cutting rates, and stocks tend to do poorly. Since they may be cutting more because of better inflation data rather than because of a weak economy, many think it is different this time.
The dollar made another new closing low yesterday and the I-fund is taking advantage of that lately as it sits near its all-time highs.
The market has been rallying all year on the prospects of the Fed cutting rates this year. This was one of several similar headlines we saw toward the end of last year - this one in December:
Fed rate cut euphoria rides wave of retreating inflation
Fast forward 9+ months and we still have not gotten a rate cut and here's what the S&P 500 has done in anticipation since the end of last year. Is there a chance that stocks could see a "sell the news" reaction, the closer we get since they have already rallied so much on the rumor?
Here's another look at the end of August and September seasonality data where it shows the weakest period between Sep 9 and 15, and than again between the 23rd and 30th, but it has done better prior to Sep 9th and between the 15th and 23rd. But also remember that election years have been tougher on Septembers than non-election years. The Fed will be cutting rates on the 18th.
Source: https://x.com/WayneWhaley1136/status/1827412282709614634
We'll get the Q2 GDP estimate on Thursday, and then the PCE Prices inflation report on Friday.
Administrative Note: It's time for the 2024 NFL Survivor Contest again. It's a very easy contest to do - just pick one winning team every week and you move on to the next week. As always, it's free and there are prizes awarded to the last survivors. The deadline to register and make your week one pick is the start of the first game this coming Sunday. More information
The S&P 500 (C-fund) is chopping around digesting some of the recent gains and it looks like it could go either way and perhaps it is waiting for the next catalyst in Nvidia tonight, and the PCE report on Friday. New highs are just overhead and the large open gap is below.
The DWCPF (S-fund) pulled back yesterday and that's two poor days in a row, although that is following the giant Fed-driven rally on Friday. I kind of see an inverted head and shoulder here, which tend to eventually break out to the upside, but if the right shoulder forms fully like the left shoulder, we could see a pullback near the 2080 area first. And if it gets that low, would it try to fill its open gap by 2040?
The EFA (I-fund) made another intraday high yesterday as the dollar continues to make new lows. The weaker dollar helps prices, but what is it saying about our economy?
BND (F-fund) was down early yesterday, then bounced back to close at its highs and end the day flat so that was a positive reversal, and that strong close put it back into that rising trading channel. Yields are showing signs of life, which would not be good here, but GDP tomorrow and the inflation reports on Friday should give us a more definitive answer.
Thanks so much for reading! We'll see you back here 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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I mentioned the semiconductors yesterday as a possible leader for the next bigger move and yesterday the sector had a solid day, gaining over 1% as investors await Nvidia. The chart has been coiling in recent days for some kind of move as the chart hovers above key support. Nvidia will likely break this chart one way or the other, but there's one more trading day before Nvidia reports tonight after the closing bell.
It's not at its all time highs from May, but Nvidia is up about 40% off the August low already. It has a decent looking bullish flag but so as of now it is making a 2nd lower high. Expectations are very high and they must easily beat estimates and probably raise guidance for their next quarter, to rally from here.
The 10-year Treasury Yield (3.83%) was up modestly yesterday, while the 2-year Yield (3.91) was down and that yield curve inversion is once again threatening to flatten out, steepen, and "de-invert." That sounds good since the inversion often precedes a recession, but the steepening tends to come when the economy is weakening and the Fed is cutting rates, and stocks tend to do poorly. Since they may be cutting more because of better inflation data rather than because of a weak economy, many think it is different this time.
The dollar made another new closing low yesterday and the I-fund is taking advantage of that lately as it sits near its all-time highs.
The market has been rallying all year on the prospects of the Fed cutting rates this year. This was one of several similar headlines we saw toward the end of last year - this one in December:
Fed rate cut euphoria rides wave of retreating inflation
Fast forward 9+ months and we still have not gotten a rate cut and here's what the S&P 500 has done in anticipation since the end of last year. Is there a chance that stocks could see a "sell the news" reaction, the closer we get since they have already rallied so much on the rumor?
Here's another look at the end of August and September seasonality data where it shows the weakest period between Sep 9 and 15, and than again between the 23rd and 30th, but it has done better prior to Sep 9th and between the 15th and 23rd. But also remember that election years have been tougher on Septembers than non-election years. The Fed will be cutting rates on the 18th.
Source: https://x.com/WayneWhaley1136/status/1827412282709614634
We'll get the Q2 GDP estimate on Thursday, and then the PCE Prices inflation report on Friday.
Administrative Note: It's time for the 2024 NFL Survivor Contest again. It's a very easy contest to do - just pick one winning team every week and you move on to the next week. As always, it's free and there are prizes awarded to the last survivors. The deadline to register and make your week one pick is the start of the first game this coming Sunday. More information
The S&P 500 (C-fund) is chopping around digesting some of the recent gains and it looks like it could go either way and perhaps it is waiting for the next catalyst in Nvidia tonight, and the PCE report on Friday. New highs are just overhead and the large open gap is below.
The DWCPF (S-fund) pulled back yesterday and that's two poor days in a row, although that is following the giant Fed-driven rally on Friday. I kind of see an inverted head and shoulder here, which tend to eventually break out to the upside, but if the right shoulder forms fully like the left shoulder, we could see a pullback near the 2080 area first. And if it gets that low, would it try to fill its open gap by 2040?
The EFA (I-fund) made another intraday high yesterday as the dollar continues to make new lows. The weaker dollar helps prices, but what is it saying about our economy?
BND (F-fund) was down early yesterday, then bounced back to close at its highs and end the day flat so that was a positive reversal, and that strong close put it back into that rising trading channel. Yields are showing signs of life, which would not be good here, but GDP tomorrow and the inflation reports on Friday should give us a more definitive answer.
Thanks so much for reading! We'll see you back here 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.
