The stock market ended a big month with another rally on Friday after a favorable PCE prices report gave us evidence of easing inflation. We saw 1% plus gains in most of the broader indices. The soft report also sent yields down helping bonds and the F-fund to a good day as well. The pre-holiday activity felt like pre-holiday action with the bears heading off to their weekend hot spots. Trading volume did tick up, most likely because it was the last trades of the 2nd quarter for money managers.
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I planned to do a quick report today but I got a little carried away while going through some charts. Depending on the action in today's half day of trading, I may just keep this commentary up, with small changes, for Wednesday so I don't have to work too hard on the 4th.
Yields pulled back on the PCE Prices report and the 10-year yield put in a double top formation that could precede a modest pullback, but surprisingly, the bull flag here suggests a possible breakout. That seems odd given the Fed's determination to slow down the economy. Perhaps they are failing to do so.
The dollar broke out above resistance on Thursday but fell back below that resistance on Friday and may be looking to fill in the open gap below.
The 2 / 10 year yield curve shows us that it is closing in on its most inverted position since the low in March before the Fed tried to help out the regional banks. Besides the brief inversion in April of 2022, it inverted for a second time about one year ago to the day and has remained inverted. Historically it has meant a recession is coming within 18 - 24 months, yet there is still debate over whether it is "different this time."
The small caps had a good day, week, and month, but meanwhile the regional banks that gave the S-fund so much trouble earlier this year, is starting to show some troubled action. It fell below resistance and failed to reclaim the 50-day EMA on Thursday and Friday.
Unless there is a post-holiday reversal, the holiday bias favors the bulls this week but coming off of a big month and heading into a new quarter, perhaps there will be a reason for money mangers to lock in some gains -- assuming they have some because this rally had gotten so extended that it likely brought in some late chasers who missed a lot of the gains.
I had a good month myself but in comparison to the gains in the stock funds in June, I could have / should have, done better. I didn't see this relentless strength coming, giving what we know, or assume, is coming later.
There will be just a half day of trading today (Monday) with the stock market closing at 1 PM ET, and of course the stock market and TSP are closed on Tuesday.
Admin note: For you forum members, if you use TapaTalk to browse the forum on your mobile devices, they are having a 50% off sale on their ad-free mobile app version. They still have a free version but until July 8th you can get the ad-free version for just $5 for a year, or $0.49 a month. Cancel any time. I'm not affiliated with them financially in any way except that I pay them a fee to post our forum on their app. It's what I use to access the TSP Talk Forum (or other forums) on my phone.
More info: [url]https://play.google.com/store/apps/details?id=com.quoord.tapatalkpro.activity
[/URL]
The S&P 500 (C-fund) closed at a new 2023 high to end the first half of the year. It opened another gap on Friday as it nears the top if the trading channel. The PMO indicator has turned up again.
The weekly chart looks great, but clearly extended so unless it is going to go straight up for the rest of the year, it could be ready for one of those pullbacks. When... is the the question. The Fed may be raising interest rates at their meeting in late July, which also happens to be when big tech earnings will start coming out. Will we see some profit taking beforehand, or maybe after?
DWCPF (S-fund) is hitting a double top and the second chart goes back longer term and we can see the large bear flag getting ready to perhaps test the top of the flag.
If this breaks down, as bears flags tend to do, there would a long way to go on the downside to reach a bear flag target price, but maybe it breaks up for some reason? Seems to be the thing these days.
EFA (I-fund) gapped up on Friday with the rest of the stock funds, and the weakness in the dollar helped. This looks better now that it is back above the 20-day EMA, but was last week's rally just pre-holiday trickery?
BND (bonds / F-fund) made a nice come back on Friday although it didn't quite fill in Thursday's big open gap, nor get back all of Thursday's big loss. The bear flag is testing its support here and the second chart shows how much trouble it could be in if that support breaks.
The question here is, if Thursday's action was another fake out move like we have seen previously (red arrows.)
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
Market Commentary Archives
To get weekly or daily notifications when we post new commentary, sign up HERE.
Thanks so much for reading. Enjoy your holiday, and we'll see you back here on Wednesday!
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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[TR]
[TD="align: center"]
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[TD="width: 338, align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
I planned to do a quick report today but I got a little carried away while going through some charts. Depending on the action in today's half day of trading, I may just keep this commentary up, with small changes, for Wednesday so I don't have to work too hard on the 4th.
Yields pulled back on the PCE Prices report and the 10-year yield put in a double top formation that could precede a modest pullback, but surprisingly, the bull flag here suggests a possible breakout. That seems odd given the Fed's determination to slow down the economy. Perhaps they are failing to do so.
The dollar broke out above resistance on Thursday but fell back below that resistance on Friday and may be looking to fill in the open gap below.
The 2 / 10 year yield curve shows us that it is closing in on its most inverted position since the low in March before the Fed tried to help out the regional banks. Besides the brief inversion in April of 2022, it inverted for a second time about one year ago to the day and has remained inverted. Historically it has meant a recession is coming within 18 - 24 months, yet there is still debate over whether it is "different this time."
The small caps had a good day, week, and month, but meanwhile the regional banks that gave the S-fund so much trouble earlier this year, is starting to show some troubled action. It fell below resistance and failed to reclaim the 50-day EMA on Thursday and Friday.
Unless there is a post-holiday reversal, the holiday bias favors the bulls this week but coming off of a big month and heading into a new quarter, perhaps there will be a reason for money mangers to lock in some gains -- assuming they have some because this rally had gotten so extended that it likely brought in some late chasers who missed a lot of the gains.
I had a good month myself but in comparison to the gains in the stock funds in June, I could have / should have, done better. I didn't see this relentless strength coming, giving what we know, or assume, is coming later.
There will be just a half day of trading today (Monday) with the stock market closing at 1 PM ET, and of course the stock market and TSP are closed on Tuesday.
Admin note: For you forum members, if you use TapaTalk to browse the forum on your mobile devices, they are having a 50% off sale on their ad-free mobile app version. They still have a free version but until July 8th you can get the ad-free version for just $5 for a year, or $0.49 a month. Cancel any time. I'm not affiliated with them financially in any way except that I pay them a fee to post our forum on their app. It's what I use to access the TSP Talk Forum (or other forums) on my phone.
More info: [url]https://play.google.com/store/apps/details?id=com.quoord.tapatalkpro.activity
[/URL]
The S&P 500 (C-fund) closed at a new 2023 high to end the first half of the year. It opened another gap on Friday as it nears the top if the trading channel. The PMO indicator has turned up again.
The weekly chart looks great, but clearly extended so unless it is going to go straight up for the rest of the year, it could be ready for one of those pullbacks. When... is the the question. The Fed may be raising interest rates at their meeting in late July, which also happens to be when big tech earnings will start coming out. Will we see some profit taking beforehand, or maybe after?
DWCPF (S-fund) is hitting a double top and the second chart goes back longer term and we can see the large bear flag getting ready to perhaps test the top of the flag.
If this breaks down, as bears flags tend to do, there would a long way to go on the downside to reach a bear flag target price, but maybe it breaks up for some reason? Seems to be the thing these days.
EFA (I-fund) gapped up on Friday with the rest of the stock funds, and the weakness in the dollar helped. This looks better now that it is back above the 20-day EMA, but was last week's rally just pre-holiday trickery?
BND (bonds / F-fund) made a nice come back on Friday although it didn't quite fill in Thursday's big open gap, nor get back all of Thursday's big loss. The bear flag is testing its support here and the second chart shows how much trouble it could be in if that support breaks.
The question here is, if Thursday's action was another fake out move like we have seen previously (red arrows.)
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
Market Commentary Archives
To get weekly or daily notifications when we post new commentary, sign up HERE.
Thanks so much for reading. Enjoy your holiday, and we'll see you back here on Wednesday!
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.
