Stocks were down early after the second consecutive quarter of negative GDP reading basically suggesting a recession is here, but the dip buyers didn't care as they seem to be back in the picture, and it was smooth sailing during the afternoon trading and into the close. The Dow gained 332-points and we saw 1% plus gains almost across the index board. Bonds were up (yields down), oil was down, and the dollar was mostly flat.
[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]
The market has led the data once again as we had a 6 month correction / bear market, and now the data is coming out telling us that we were in a recession. Inflation was a apparent and that was part of the problem, but the Fed raising interest rates helped push the economy into negative territory.
By the way, they are still raising rates but the market seems to be looking forward to something positive, unless this is just one of those bear market rallies that go further than any of us think possible. A recession could get the Fed to stop raising and that could be what the market is reacting to now, even though it may not pause, or even start cutting rates, probably until next year or December at the latest. So can the market rally for that long with that being an unknown for so long?
After the bell the news got even better for stocks with big gains in Apple and Amazon after hours after reporting earnings and that helped push the futures up sharply again so the market should open on Friday with the wind at the bulls' back.
These are after hours results:
Intel isn't the market mover it once was but it disappointed after hours and was down sharply.
I didn't include ROKU in that image because it isn't much of a market mover either, but it was down a steep 25% after hours after reporting earnings.
The 10-year Treasury Yield was down and the negative GDP was somewhat of a surprise to some, although the Atlanta Fed had been calling this for a long time. The official estimates were looking for a gain in GDP of 0.5% but it came in at a 0.9% decline. The push lower in yields created a breakdown in the head and shoulders pattern, and that helped bond prices and the F-fund to another strong rally.
The price of oil is trading in a very tight range recently. It broke above the descending resistance line recently and that 200-dayEMA refuses to give way. Yesterday was a negative reversal day so the oil bulls have some work to do today to keep it above that support. If the bears want to regain control of the stock market, I think oil needs to stay above 95 - 100. Below that and the bulls should be more aggressive (buying stocks.)
The Dow Transportation Index moved sharply higher despite the negative economic data. Interesting. The chart was trying to tell us that with that bull flag it had been forming, which followed what turned out to be a possible double bottom near 12,750. But the Transports are not usually very happy about weaker than expected economic data so what was that rally all about?
The S&P 500 (C-fund) moved above that bear flag and it came on a day where we basically heard that we have been in a recession. The upside targets at this point are the resistance areas between 4075 and almost 4200. You can see them all on the chart. Could we still see new lows? For sure. A summer rally is common, and as I have said a few times, August and September can be rough months, and between them and maybe October, I can see the bears making another push to new lows.
The DWCPF (S-fund) filled its open gap, hit the top of its bear flag, and closed right at those resistance areas. That makes any upside today very compelling for the bulls as the resistance would be easily jumped over. If we lose the early gains today, it could be a warning sign.
EFA (I-fund) is also still in a lot of technical trouble as the descending trading channel persists and the open gap is just above the channel, making 66 a key level that bulls will need to get this above before it is considered anything but bearish.
BND (F-fund) broke out above the late May peak and the open gap from that next day. That's a good sign but it is leaving more open gaps below in its wake. Looks good but the gaps may suggest some backing and filling coming.
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. Have a great weekend!
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]
The market has led the data once again as we had a 6 month correction / bear market, and now the data is coming out telling us that we were in a recession. Inflation was a apparent and that was part of the problem, but the Fed raising interest rates helped push the economy into negative territory.
By the way, they are still raising rates but the market seems to be looking forward to something positive, unless this is just one of those bear market rallies that go further than any of us think possible. A recession could get the Fed to stop raising and that could be what the market is reacting to now, even though it may not pause, or even start cutting rates, probably until next year or December at the latest. So can the market rally for that long with that being an unknown for so long?
After the bell the news got even better for stocks with big gains in Apple and Amazon after hours after reporting earnings and that helped push the futures up sharply again so the market should open on Friday with the wind at the bulls' back.
These are after hours results:
Intel isn't the market mover it once was but it disappointed after hours and was down sharply.
I didn't include ROKU in that image because it isn't much of a market mover either, but it was down a steep 25% after hours after reporting earnings.
The 10-year Treasury Yield was down and the negative GDP was somewhat of a surprise to some, although the Atlanta Fed had been calling this for a long time. The official estimates were looking for a gain in GDP of 0.5% but it came in at a 0.9% decline. The push lower in yields created a breakdown in the head and shoulders pattern, and that helped bond prices and the F-fund to another strong rally.
The price of oil is trading in a very tight range recently. It broke above the descending resistance line recently and that 200-dayEMA refuses to give way. Yesterday was a negative reversal day so the oil bulls have some work to do today to keep it above that support. If the bears want to regain control of the stock market, I think oil needs to stay above 95 - 100. Below that and the bulls should be more aggressive (buying stocks.)
The Dow Transportation Index moved sharply higher despite the negative economic data. Interesting. The chart was trying to tell us that with that bull flag it had been forming, which followed what turned out to be a possible double bottom near 12,750. But the Transports are not usually very happy about weaker than expected economic data so what was that rally all about?
The S&P 500 (C-fund) moved above that bear flag and it came on a day where we basically heard that we have been in a recession. The upside targets at this point are the resistance areas between 4075 and almost 4200. You can see them all on the chart. Could we still see new lows? For sure. A summer rally is common, and as I have said a few times, August and September can be rough months, and between them and maybe October, I can see the bears making another push to new lows.
The DWCPF (S-fund) filled its open gap, hit the top of its bear flag, and closed right at those resistance areas. That makes any upside today very compelling for the bulls as the resistance would be easily jumped over. If we lose the early gains today, it could be a warning sign.
EFA (I-fund) is also still in a lot of technical trouble as the descending trading channel persists and the open gap is just above the channel, making 66 a key level that bulls will need to get this above before it is considered anything but bearish.
BND (F-fund) broke out above the late May peak and the open gap from that next day. That's a good sign but it is leaving more open gaps below in its wake. Looks good but the gaps may suggest some backing and filling coming.
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. Have a great weekend!
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.
