It was a slow day for stocks yesterday as the market tries to process the recent geological events, the potential major supply chain roadblock, and incoming economic data. Stocks opened lower and they did battle back, but most of the major indices closed near the flat line as we await Friday's jobs report. Bonds were down as yields and the dollar rallied.
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The conflict in the Middle East shook up the stock market briefly again, and it sent the price of oil up several dollars after Israel threatened retaliation on Iran's oil fields.
The chart could be telling a different story as the oil market deals with the US and global economic conditions, which may or may not be slowing down. I believe it is slowing, but maybe not as much as the inverted yield curve and increase in the unemployment rate may have suggested over the last couple of years - at least not yet. Any slowdown is going to put some pressure on the price of oil, which can be a telling gauge for the economy. If 500 bombs directed at Israel and a threat of retaliation can't push WTIC Oil above resistance, what would it take? So I believe oil could be coming down again, which tends to be good for the stock market.
The price moved over 72 a barrel at one point yesterday, but the chart hit a wall of resistance and closed near 70, up just 0.39%. The bear flag also suggests lower prices may be coming.
The dollar was up and it moved above resistance, and this could put some pressure on stocks. Yesterday's move did fill in an open gap from August and perhaps that was the goal, but between the bearish looking flag and the possible double bottom, I think this may be a coin flip going forward.
I have been talking about the Federal Reserve increasing liquidity, making money not only easier to get, but cheaper, and that's is a wind at the back of the stock market. This next chart is interesting as it related to M2 Money Supply and Inflation. The M2 Money Supply, is a measure for the amount of currency in circulation.
The last few times that the Money Supply Growth moved from falling below, to back above the rate of Inflation, good things happened to the stock market. One was in 2005 and the other 2010, and it's just about to cross it again.
And here is what happened to the S&P 500 after those crossovers.
The prior time to 2005 was in August of 1995 and stocks had been up all year that year, both before and after the crossover.
Notice in 2005 and 2010 that the market was quite choppy near the lows before the post crossover rally started. That may tell us that the set up is good going forward, but it won't be easy to just buy as the market could get more volatile before it gets better, but buying pullbacks may work well.
We'll get the September Jobs Report on Friday. Estimates are looking for a gain of 120K to 135K jobs. The unemployment rate is expected to remain at 4.2%.
Admin Note: In the coming weeks we may be working on a server and software upgrade that could disrupt the website periodically. It's something I am not looking forward to, but I've procrastinated long enough and it's time to get it done. The maintenance could take part or all of the website down at times, but it will not impact Premium Service email and text alerts. I'll keep you posted.
The S&P 500 (C-fund) is pulling back to a very convenient spot that could easily hold, but the chart has other areas of support further down that may need to get tested as well. This chart shows us that the S&P 500 has been consolidating since that mid-July peak, so if you have been fully invested in the C-fund for the last 11-weeks, you really haven't made much money. It's probably coiling up for a big move but will it happen before or after the election because we can make money in the G or F-funds if we think it is going to take more time.
DWCPF (S-fund) has also been treading water for a couple of months, and I don't see too much wrong with this chart except that, before any breakout, it could try to fake us out with a spike lower to test the other slower moving averages to try to get investors leaning the wrong way. They don't make it easy.
On Tuesday the EFA (-0.75%) actually put up the best comparable return for the I-fund (-0.79%). ACWX's -0.19%, and the "ex USA ex China ex Hong Kong Index" -0.36%, were not as effective in predicting a price on Tuesday. So the inconsistencies continue as the TSP shifts the components of the I-fund this year.
Yesterday the EFA was down 0.20%, ACWX was up 0.14%, and the "ex USA ex China ex Hong Kong Index" was down 0.82%. We have to see what the TSP settles on. You can see the final daily price and return posted on our site each evening.
Let's go with the ETF chart today, which was down 0.20% yesterday. It is testing some rising support but the moving averages are all well below that.
Ditto! BND (F-fund) continues to test and hold at the 20-day EMA. This looks bullish and will continue higher as long as the 10-year yield stays below 3.9%.
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
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
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.
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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The conflict in the Middle East shook up the stock market briefly again, and it sent the price of oil up several dollars after Israel threatened retaliation on Iran's oil fields.
The chart could be telling a different story as the oil market deals with the US and global economic conditions, which may or may not be slowing down. I believe it is slowing, but maybe not as much as the inverted yield curve and increase in the unemployment rate may have suggested over the last couple of years - at least not yet. Any slowdown is going to put some pressure on the price of oil, which can be a telling gauge for the economy. If 500 bombs directed at Israel and a threat of retaliation can't push WTIC Oil above resistance, what would it take? So I believe oil could be coming down again, which tends to be good for the stock market.
The price moved over 72 a barrel at one point yesterday, but the chart hit a wall of resistance and closed near 70, up just 0.39%. The bear flag also suggests lower prices may be coming.
The dollar was up and it moved above resistance, and this could put some pressure on stocks. Yesterday's move did fill in an open gap from August and perhaps that was the goal, but between the bearish looking flag and the possible double bottom, I think this may be a coin flip going forward.
I have been talking about the Federal Reserve increasing liquidity, making money not only easier to get, but cheaper, and that's is a wind at the back of the stock market. This next chart is interesting as it related to M2 Money Supply and Inflation. The M2 Money Supply, is a measure for the amount of currency in circulation.
The last few times that the Money Supply Growth moved from falling below, to back above the rate of Inflation, good things happened to the stock market. One was in 2005 and the other 2010, and it's just about to cross it again.
And here is what happened to the S&P 500 after those crossovers.
The prior time to 2005 was in August of 1995 and stocks had been up all year that year, both before and after the crossover.
Notice in 2005 and 2010 that the market was quite choppy near the lows before the post crossover rally started. That may tell us that the set up is good going forward, but it won't be easy to just buy as the market could get more volatile before it gets better, but buying pullbacks may work well.
We'll get the September Jobs Report on Friday. Estimates are looking for a gain of 120K to 135K jobs. The unemployment rate is expected to remain at 4.2%.
Admin Note: In the coming weeks we may be working on a server and software upgrade that could disrupt the website periodically. It's something I am not looking forward to, but I've procrastinated long enough and it's time to get it done. The maintenance could take part or all of the website down at times, but it will not impact Premium Service email and text alerts. I'll keep you posted.
The S&P 500 (C-fund) is pulling back to a very convenient spot that could easily hold, but the chart has other areas of support further down that may need to get tested as well. This chart shows us that the S&P 500 has been consolidating since that mid-July peak, so if you have been fully invested in the C-fund for the last 11-weeks, you really haven't made much money. It's probably coiling up for a big move but will it happen before or after the election because we can make money in the G or F-funds if we think it is going to take more time.
DWCPF (S-fund) has also been treading water for a couple of months, and I don't see too much wrong with this chart except that, before any breakout, it could try to fake us out with a spike lower to test the other slower moving averages to try to get investors leaning the wrong way. They don't make it easy.
On Tuesday the EFA (-0.75%) actually put up the best comparable return for the I-fund (-0.79%). ACWX's -0.19%, and the "ex USA ex China ex Hong Kong Index" -0.36%, were not as effective in predicting a price on Tuesday. So the inconsistencies continue as the TSP shifts the components of the I-fund this year.
Yesterday the EFA was down 0.20%, ACWX was up 0.14%, and the "ex USA ex China ex Hong Kong Index" was down 0.82%. We have to see what the TSP settles on. You can see the final daily price and return posted on our site each evening.
Let's go with the ETF chart today, which was down 0.20% yesterday. It is testing some rising support but the moving averages are all well below that.
Ditto! BND (F-fund) continues to test and hold at the 20-day EMA. This looks bullish and will continue higher as long as the 10-year yield stays below 3.9%.
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
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
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.
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.
