Stocks sold off early yesterday to test Tuesday's lows and, like on Tuesday, bounced back to erase the morning losses by mid-afternoon. But it wasn't over. The S&P 500 did go positive with a little more than an hour left to trade, but then spent the last hour racing toward the morning lows, perhaps some nervous selling in front of this morning's CPI report. Trading volume was on the light side - lowest volume since the July 3 pre-holiday trading. Bonds (F-fund) and the I-fund both ended the day near break even.
[TABLE="align: center"]
[TR]
[TD="align: center"]
[/TD]
[TD]
[/TD]
[TD="width: 338, align: center"] Daily TSP Funds Return
[TABLE="align: center"]
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
Disney reported earnings after the bell yesterday and was down about 2% initially after hours, but flipped higher during the conference call and is now (as of this writing Wednesday evening) trading up 2 or 3%. It's not a big market mover in general but it is a Dow stock and has some influence, and reversals like that can have an impact on the stock market
Whenever I see back and forth trading like we saw the last couple of days, and even going back five trading days, not only do we see a battle between the bulls (dip buyers) and the bears (sell the rallies) but I think it is action that is trying to get the average trader to lean the wrong way, whether on an up day, or a down day. I'm speculating, but also suspicious. Does the sudden selling in the final hour mean someone got an early peak at the CPI report? Or, did they push stocks lower so they can buy the futures at lower prices overnight before the report?
What can we really glean from the action over the last 5 days? The bears had their chance to push things lower but they couldn't even fill that open gap near 4440 this week - yet, anyway. The bulls also had their shot at ending the pullback but 4520 has been a tough area for them to crack on the upside, even with the open gap up near 4560.
That large negative outside reversal day on July 27 did give us a clue that the bears could start taking charge. And, after a big two day bounce back rally on the 28th and 31st, the bears made another move, possibly eying that open gap by 4440 as a pullback target. The falling wedge ironically also suggests an eventual bullish breakout but 4440 could get tagged before anything like that happens.
Whether it's today's CPI report, or Friday's PPI report, I look for a few more days of volatility to allow these formations to potentially play out.
That's just some short-term possibilities. There are a bunch of intermediate and long term possibilities as well. I think most agree that the market has entered a new bull market and that gives the bears some concern. But with soft landing, hard landing, no landing, etc., recession possibilities stirring in the next 6 to 12 months, plus higher interest rates than we have seen in a long time while S&P 500, and weak seasonality, I doubt the bulls are all that comfortable either.
This recent market is more suited for day traders who can buy near the prior day's lows and sell near the the prior highs, and they can probably make a profit. But with just two trades per month, we have to think differently and what that means for us in a choppy market, is that we will be on the wrong side about half the time until a new trend is established.
I don't believe we have a new downtrend yet with the 50-day EMAs still holding on the C and S fund charts, but they are close to being tested now so that could change soon.
The Yield on the 10-year Treasury and the dollar were fairly flat and didn't have much of an impact yesterday.
Right now the July CPI Report (Consumer price Index) is what is in focus and that gets released before the opening bell, and then tomorrow the PPI (Producer Price Index) comes out. These could be market movers and may help push the indices out of the recent short term ranges they've been in after the fallout from the Fitch downgrade of US credit rating on August 2nd.
The S&P 500 (C-fund) traded in the range of Tuesday's high and low, this time closing near the lows. There were opportunities for the bears to push this down into the open gap near 4440 but the bulls kept it above the gap for some reason. Between the bottom of that gap (4440), the 50-day EMA (4426), and the bottom of that blue falling wedge pattern (~4430) there is a lot of support just below he current price. An overly hot CPI report could gap the S&P down below all of that, but if not, the bulls may get more confident if that support keeps holding.
DWCPF (S-fund) has filled its gap already and it is now testing its wedge pattern and starring right at the 50-day EMA and an old breakout point from early July, both of which could act as support in an uptrend. There are some cracks here with the red rising support line off the May and June lows breaking this week.
EFA (I-fund) was flat instead of down, and the late sell off in the US stocks may have had something to do with that. 71.50 looks like an important area to hold, but the longer this grinds below 73, the more it will start to look like a bear flag.
BND (Bonds / F-fund) was up a bit but did manage to hold above that 100-day EMA for a second straight day. That's the only support around right now to keep it from falling back to fill those open gaps below.
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
Daily Market Commentary Archives
To get weekly or daily notifications when we post new commentary, sign up HERE.
Thanks so much 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.
[TABLE="align: center"]
[TR]
[TD="align: center"]
[TD]
[/TD]
[TD="width: 338, align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
Disney reported earnings after the bell yesterday and was down about 2% initially after hours, but flipped higher during the conference call and is now (as of this writing Wednesday evening) trading up 2 or 3%. It's not a big market mover in general but it is a Dow stock and has some influence, and reversals like that can have an impact on the stock market
Whenever I see back and forth trading like we saw the last couple of days, and even going back five trading days, not only do we see a battle between the bulls (dip buyers) and the bears (sell the rallies) but I think it is action that is trying to get the average trader to lean the wrong way, whether on an up day, or a down day. I'm speculating, but also suspicious. Does the sudden selling in the final hour mean someone got an early peak at the CPI report? Or, did they push stocks lower so they can buy the futures at lower prices overnight before the report?
What can we really glean from the action over the last 5 days? The bears had their chance to push things lower but they couldn't even fill that open gap near 4440 this week - yet, anyway. The bulls also had their shot at ending the pullback but 4520 has been a tough area for them to crack on the upside, even with the open gap up near 4560.
That large negative outside reversal day on July 27 did give us a clue that the bears could start taking charge. And, after a big two day bounce back rally on the 28th and 31st, the bears made another move, possibly eying that open gap by 4440 as a pullback target. The falling wedge ironically also suggests an eventual bullish breakout but 4440 could get tagged before anything like that happens.
Whether it's today's CPI report, or Friday's PPI report, I look for a few more days of volatility to allow these formations to potentially play out.
That's just some short-term possibilities. There are a bunch of intermediate and long term possibilities as well. I think most agree that the market has entered a new bull market and that gives the bears some concern. But with soft landing, hard landing, no landing, etc., recession possibilities stirring in the next 6 to 12 months, plus higher interest rates than we have seen in a long time while S&P 500, and weak seasonality, I doubt the bulls are all that comfortable either.
This recent market is more suited for day traders who can buy near the prior day's lows and sell near the the prior highs, and they can probably make a profit. But with just two trades per month, we have to think differently and what that means for us in a choppy market, is that we will be on the wrong side about half the time until a new trend is established.
I don't believe we have a new downtrend yet with the 50-day EMAs still holding on the C and S fund charts, but they are close to being tested now so that could change soon.
The Yield on the 10-year Treasury and the dollar were fairly flat and didn't have much of an impact yesterday.
Right now the July CPI Report (Consumer price Index) is what is in focus and that gets released before the opening bell, and then tomorrow the PPI (Producer Price Index) comes out. These could be market movers and may help push the indices out of the recent short term ranges they've been in after the fallout from the Fitch downgrade of US credit rating on August 2nd.
The S&P 500 (C-fund) traded in the range of Tuesday's high and low, this time closing near the lows. There were opportunities for the bears to push this down into the open gap near 4440 but the bulls kept it above the gap for some reason. Between the bottom of that gap (4440), the 50-day EMA (4426), and the bottom of that blue falling wedge pattern (~4430) there is a lot of support just below he current price. An overly hot CPI report could gap the S&P down below all of that, but if not, the bulls may get more confident if that support keeps holding.
DWCPF (S-fund) has filled its gap already and it is now testing its wedge pattern and starring right at the 50-day EMA and an old breakout point from early July, both of which could act as support in an uptrend. There are some cracks here with the red rising support line off the May and June lows breaking this week.
EFA (I-fund) was flat instead of down, and the late sell off in the US stocks may have had something to do with that. 71.50 looks like an important area to hold, but the longer this grinds below 73, the more it will start to look like a bear flag.
BND (Bonds / F-fund) was up a bit but did manage to hold above that 100-day EMA for a second straight day. That's the only support around right now to keep it from falling back to fill those open gaps below.
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
Daily Market Commentary Archives
To get weekly or daily notifications when we post new commentary, sign up HERE.
Thanks so much 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.
