More mixed action for the stock market as the big three indices remain buoyant, while the small caps got beaten down for a second straight day. The Dow gained 44-points and the S&P had a small gain, while the Nasdaq dipped modestly, although the large cap tech riddled Nasdaq 100 index closed with a gain as the MAGA stocks, as CNBC calls them; Microsoft, Apple, Google, and Amazon, where all up on the day. Bonds rallied, the dollar was down, and oil pulled back sharply.
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The Fed eased investors minds a bit yesterday as they basically dismissed the recent inflationary data as short term annoyances (my word), so yields fell again and what worked yesterday were stocks that benefit from low yields because the 10-year yield tanked and gave back Tuesday's gain.
The market loves to fool the most people it can at any given time. It's doing a pretty good job of doing that right now (including myself.) With everyone looking at the shiny large indices like the Dow, S&P 500, and Nasdaq, which have been doing well and holding near all time highs, most stocks are actually struggling. Even the 500 stocks in the S&P 500 are struggling as a whole as seen in the RSP chart below, as compared to the S&P 500 index itself, which is up a couple of hundred points since early May while the RSP is flat, because of the heavy weighting of the big tech stocks..
We can see that disparity in the small caps fund (S-fund) as well, which consists of about 4500 stocks, and also the Russell 2000 small caps index. They got me recently as we saw a nice decline in the smalls caps off the late June high (red arrow) and when it looked like it was about to bottom and reverse up, I took a shot buying a chunk of the S-fund (green arrow), and have since taken a hit. That same thing happen to some extent in May (red box) and it flipped right back up back then, but can that happen again?
There are a lot of cross currents out there with yields falling again, yet the CPI Report was quite inflationary. We have been getting very weak jobs data one month, followed by strong a jobs report the following month. Interest rates are still near 0% so that seems to be a cushion on the market, but proposed tax hikes, higher gas prices, and prices in general suggest that could change. Then there's the disparity in the indices making it important to pick the right fund. I took a chance on the beaten down S-fund and so far that hasn't paid off. Luckily I do have some in the C and I funds which have been holding up much better, so it is taking some of the sting away. But perhaps our TSP Talk Plus subscribers would disagree.
The S&P 500 (C-fund) has been holding up well, and it actually made a new intraday high yesterday, but it is stalling just below 4400. The action looks similar to what we saw in early June and it was a mixed bag after that one. We did see a 3-day rally starting on June 10 after some sideways action, but then we saw another sharp pullback right after that, which tested the 50-day EMA.
The DWCPF (S-fund) was down very sharply yesterday for a second straight session, and there may be a lot of reasons, but the sharp decline in oil prices yesterday after an announcement out of OPEC about increased supplies, and a sharp drop in yields, gave the the small banks and oil refinery companies in the S-fund some trouble. The head and shoulders pattern is testing the neckline now.
The EFA / I-fund was up with a sharp decline in the dollar. It's still above the 50-day EMA but I'm a little worried about that bear flag. A move above 80 would be big.
The Dow Transportation Index is also on a precipice looking over that 100-day average which has been holding for a long time. That's also a bear flag, although I didn't draw it in. This one is running out of time and needs to bounce soon.
The BND (bonds / F-fund) rallied pretty big for bonds and we got the answer to what we talked about yesterday, which was whether the bottom of that open gap, once filled, would act as support. It did.
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... [url]www.tsptalk.com/premiums.html
[/URL]
To get weekly or daily notifications when we post new commentary, sign up HERE.
Thanks 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"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[TD]
[/TD]
[TD="align: center"]
[/TR]
[/TABLE]
The Fed eased investors minds a bit yesterday as they basically dismissed the recent inflationary data as short term annoyances (my word), so yields fell again and what worked yesterday were stocks that benefit from low yields because the 10-year yield tanked and gave back Tuesday's gain.
The market loves to fool the most people it can at any given time. It's doing a pretty good job of doing that right now (including myself.) With everyone looking at the shiny large indices like the Dow, S&P 500, and Nasdaq, which have been doing well and holding near all time highs, most stocks are actually struggling. Even the 500 stocks in the S&P 500 are struggling as a whole as seen in the RSP chart below, as compared to the S&P 500 index itself, which is up a couple of hundred points since early May while the RSP is flat, because of the heavy weighting of the big tech stocks..
We can see that disparity in the small caps fund (S-fund) as well, which consists of about 4500 stocks, and also the Russell 2000 small caps index. They got me recently as we saw a nice decline in the smalls caps off the late June high (red arrow) and when it looked like it was about to bottom and reverse up, I took a shot buying a chunk of the S-fund (green arrow), and have since taken a hit. That same thing happen to some extent in May (red box) and it flipped right back up back then, but can that happen again?
There are a lot of cross currents out there with yields falling again, yet the CPI Report was quite inflationary. We have been getting very weak jobs data one month, followed by strong a jobs report the following month. Interest rates are still near 0% so that seems to be a cushion on the market, but proposed tax hikes, higher gas prices, and prices in general suggest that could change. Then there's the disparity in the indices making it important to pick the right fund. I took a chance on the beaten down S-fund and so far that hasn't paid off. Luckily I do have some in the C and I funds which have been holding up much better, so it is taking some of the sting away. But perhaps our TSP Talk Plus subscribers would disagree.
The S&P 500 (C-fund) has been holding up well, and it actually made a new intraday high yesterday, but it is stalling just below 4400. The action looks similar to what we saw in early June and it was a mixed bag after that one. We did see a 3-day rally starting on June 10 after some sideways action, but then we saw another sharp pullback right after that, which tested the 50-day EMA.
The DWCPF (S-fund) was down very sharply yesterday for a second straight session, and there may be a lot of reasons, but the sharp decline in oil prices yesterday after an announcement out of OPEC about increased supplies, and a sharp drop in yields, gave the the small banks and oil refinery companies in the S-fund some trouble. The head and shoulders pattern is testing the neckline now.
The EFA / I-fund was up with a sharp decline in the dollar. It's still above the 50-day EMA but I'm a little worried about that bear flag. A move above 80 would be big.
The Dow Transportation Index is also on a precipice looking over that 100-day average which has been holding for a long time. That's also a bear flag, although I didn't draw it in. This one is running out of time and needs to bounce soon.
The BND (bonds / F-fund) rallied pretty big for bonds and we got the answer to what we talked about yesterday, which was whether the bottom of that open gap, once filled, would act as support. It did.
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... [url]www.tsptalk.com/premiums.html
[/URL]
To get weekly or daily notifications when we post new commentary, sign up HERE.
Thanks 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.
