This is my first commentary since Thursday and a lot happened on Thursday and Friday, so let's see if I can make any sense of it. Stocks were down sharply on Thursday and up big on Friday. The data below only shows Friday's action, which brings up another issue, where I may have screwed up, or at least got wrong information and / or misunderstood the info I received.
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The TSP website did not mention it so last week while trying to find out if the TSP was going to be open during Friday's holiday, I emailed the Thrift Line. I got a pretty quick response saying they would be closed (see email below). Unfortunately I took the reply to mean they were not processing transactions, but now I see they posted share prices for Friday, which I did not expect if they were closed, so I'm not sure what's going on. The questions is, were they allowing transactions?
I need to know for the AutoTracker purposes but also because I would need to apologize because I shared that information about them being closed with all of you, and it may have been inaccurate. I am very sorry if I misinterpreted what they were saying, or perhaps I just asked the wrong question.
As for the AutoTracker, I am not going to process Friday's share prices until I confirm whether or not IFT's made on Friday morning are were processed, because some members attempted to make a trade so I am not sure how to handle them yet. If you have any information I love to hear from you at tom @ --- this website URL. (I don't like to put the address here for bots to grab)
I don't know what kind of shenanigans were going on last week in the stock market after a clear breakdown in the charts on Thursday, followed by a complete upward reversal on Friday, which was a federal holiday so trading volume was on the light side.
If you read these market comments regularly, you know I am on the paranoid side when it comes to the big money manipulating the smaller investors / traders, and that may be what we saw last week. It just didn't feel like normal, or organic, trading action.
Anyway, this has me a little flustered - the crazy action and the TSP holiday mix up, and as I write this on Sunday (for Monday), it also happens to be my 30th wedding anniversary, and if you can believe it, my wife actually wants to do something today rather than watch me working.
So, let's get on with it...
The S&P 500 broke down on Thursday. That was a clear F-flag breakdown on Thursday. As I have mentioned before, some of the larger financial institutions have trained their traders to trade against "normal" chart patterns, and as a result we have seen more bullish charts break down, and bearish formations break upward. That may be what happened as the action on Thursday was clearly bearish sign and it got "normal" traders leaning toward the bearish side... but then we see what happened on Friday. Were the institutions playing games during the light volume holiday trading day? Which day is real - Thursday's breakdown or the giant holiday rally?
The Nasdaq did break above the longer-term descending resistance line, and it did so without filling in three open gaps from below, which seems unusual. Leaving one gap open is not typical, but it happens, but three open gaps left open?
The Russell 2000 small caps chart doesn't look anything like the Nasdaq chart as it remains in its down trend, below its 50-day EMA, and near the lows as it fills in its gaps below - one of two, anyway.
The Yield on the 10-year Treasury Yield was flat on Friday - so no major stock market moving activity in the bond market after Thursday's disappointing bond auction sent yields up sharply, and bond prices (F-fund) lower. The dollar was also not very active.
I'm trying to make this quick but I wanted to point out that the 2-year / 10-year Yield Curve is actually getting more inverted again, and it has been inverted since July of 2022. So are things getting better, or worse? The debate of whether we will get a recession in 2024 is pretty polarized, but based on this chart and historical tendencies, it looks inevitable. It's the relentless strength in the labor market that keeps the non-recession side convinced.
The Fed's balance sheet is getting reduced weekly and that is the opposite of Quantitative Easing, it's actually reducing liquidity and that should be a drag on the market. The market likes cheap, easy money. We have the opposite right now.
The Fed may be done cutting rates for now, although they are hedging on that as they still seemed concerned about inflation, but right now the bullish seasonality is the best argument for the bulls after the 3-month correction.
Guess what Friday is? November 17th is the new deadline for the budget spending legislation, so we'll have to deal with that again this week and into the weekend. Can they possibly just kick the can down the road with another continuing resolution? They have a handful of days to get that done.
We'll get the CPI Report tomorrow morning and it could make or break the recent market action although it seems like investors are getting past the concern over inflation. But has the Fed?
The S&P 500 (C-fund) saw some odd action to end the week last week with the negative reversal breakdown down on Thursday, followed by a holiday Friday that sent the index up to mid-September levels. There were a few break down candle sticks created back in mid-September and a retracement of them is not unusual. Now it is testing the resistance line coming off the July highs, and in the process it finally filled that open gap from that same time. Was it just a clean house kind of day on Friday?
DWCPF (S-fund) is also testing the top of its descending trading channel. It did fill one of its opens gaps (blue) with another fairly big one still open (red) down by 1615. This could breakout and take out the 50-day EMA on any upside move early this week, but that 200-day EMA is looming above that. I say the bears have the advantage here but it would not take much for the bull to break that resistance.
The EFA (I-fund) is similar to the small caps being below resistance with a large open gap below. It failed at the 200-day EMA last week after a one day close above earlier this month. That's not the best sign but it will likely follow in the direction of US stocks, assuming the dollar doesn't go crazy.
BND (bonds / F-fund) was up on Friday after the dip in yields. It's above its 50-day EMA but again there's an open gap below that may need some attention. That could be a bull flag forming if it can ignore that gap.
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
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.
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]
The TSP website did not mention it so last week while trying to find out if the TSP was going to be open during Friday's holiday, I emailed the Thrift Line. I got a pretty quick response saying they would be closed (see email below). Unfortunately I took the reply to mean they were not processing transactions, but now I see they posted share prices for Friday, which I did not expect if they were closed, so I'm not sure what's going on. The questions is, were they allowing transactions?
I need to know for the AutoTracker purposes but also because I would need to apologize because I shared that information about them being closed with all of you, and it may have been inaccurate. I am very sorry if I misinterpreted what they were saying, or perhaps I just asked the wrong question.
As for the AutoTracker, I am not going to process Friday's share prices until I confirm whether or not IFT's made on Friday morning are were processed, because some members attempted to make a trade so I am not sure how to handle them yet. If you have any information I love to hear from you at tom @ --- this website URL. (I don't like to put the address here for bots to grab)
I don't know what kind of shenanigans were going on last week in the stock market after a clear breakdown in the charts on Thursday, followed by a complete upward reversal on Friday, which was a federal holiday so trading volume was on the light side.
If you read these market comments regularly, you know I am on the paranoid side when it comes to the big money manipulating the smaller investors / traders, and that may be what we saw last week. It just didn't feel like normal, or organic, trading action.
Anyway, this has me a little flustered - the crazy action and the TSP holiday mix up, and as I write this on Sunday (for Monday), it also happens to be my 30th wedding anniversary, and if you can believe it, my wife actually wants to do something today rather than watch me working.
So, let's get on with it...
The S&P 500 broke down on Thursday. That was a clear F-flag breakdown on Thursday. As I have mentioned before, some of the larger financial institutions have trained their traders to trade against "normal" chart patterns, and as a result we have seen more bullish charts break down, and bearish formations break upward. That may be what happened as the action on Thursday was clearly bearish sign and it got "normal" traders leaning toward the bearish side... but then we see what happened on Friday. Were the institutions playing games during the light volume holiday trading day? Which day is real - Thursday's breakdown or the giant holiday rally?
The Nasdaq did break above the longer-term descending resistance line, and it did so without filling in three open gaps from below, which seems unusual. Leaving one gap open is not typical, but it happens, but three open gaps left open?
The Russell 2000 small caps chart doesn't look anything like the Nasdaq chart as it remains in its down trend, below its 50-day EMA, and near the lows as it fills in its gaps below - one of two, anyway.
The Yield on the 10-year Treasury Yield was flat on Friday - so no major stock market moving activity in the bond market after Thursday's disappointing bond auction sent yields up sharply, and bond prices (F-fund) lower. The dollar was also not very active.
I'm trying to make this quick but I wanted to point out that the 2-year / 10-year Yield Curve is actually getting more inverted again, and it has been inverted since July of 2022. So are things getting better, or worse? The debate of whether we will get a recession in 2024 is pretty polarized, but based on this chart and historical tendencies, it looks inevitable. It's the relentless strength in the labor market that keeps the non-recession side convinced.
The Fed's balance sheet is getting reduced weekly and that is the opposite of Quantitative Easing, it's actually reducing liquidity and that should be a drag on the market. The market likes cheap, easy money. We have the opposite right now.
The Fed may be done cutting rates for now, although they are hedging on that as they still seemed concerned about inflation, but right now the bullish seasonality is the best argument for the bulls after the 3-month correction.
Guess what Friday is? November 17th is the new deadline for the budget spending legislation, so we'll have to deal with that again this week and into the weekend. Can they possibly just kick the can down the road with another continuing resolution? They have a handful of days to get that done.
We'll get the CPI Report tomorrow morning and it could make or break the recent market action although it seems like investors are getting past the concern over inflation. But has the Fed?
The S&P 500 (C-fund) saw some odd action to end the week last week with the negative reversal breakdown down on Thursday, followed by a holiday Friday that sent the index up to mid-September levels. There were a few break down candle sticks created back in mid-September and a retracement of them is not unusual. Now it is testing the resistance line coming off the July highs, and in the process it finally filled that open gap from that same time. Was it just a clean house kind of day on Friday?
DWCPF (S-fund) is also testing the top of its descending trading channel. It did fill one of its opens gaps (blue) with another fairly big one still open (red) down by 1615. This could breakout and take out the 50-day EMA on any upside move early this week, but that 200-day EMA is looming above that. I say the bears have the advantage here but it would not take much for the bull to break that resistance.
The EFA (I-fund) is similar to the small caps being below resistance with a large open gap below. It failed at the 200-day EMA last week after a one day close above earlier this month. That's not the best sign but it will likely follow in the direction of US stocks, assuming the dollar doesn't go crazy.
BND (bonds / F-fund) was up on Friday after the dip in yields. It's above its 50-day EMA but again there's an open gap below that may need some attention. That could be a bull flag forming if it can ignore that gap.
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
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.
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.
