Stocks tumbled at the open on Thursday but reversed to the upside in afternoon trading. The dip buyers are clearly still in the picture, but are they being set up? The Dow gained 125-points after being down 245 in the morning. Amazon posted a very strong earnings report after the bell, so we should see some buying at the open on Friday.
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Over the last few years we've talked about how FAANG stocks have been holding the market up and that couldn't be any more true today. FAANG being Facebook, Amazon, Apple, Netflix, and Google. There's another acronym used that adds Microsoft and it's called MAGA - Microsoft, Amazon, Google, and Apple. These are still the stocks leading the way while about 1/3 of the S&P 500 is in a correction (down 10% or more).
Amazon's earnings after the bell sent its stock price and the index futures soaring in after hours again. Microsoft did it on Thursday and now we'll start Friday with a big boost from another mega-stock leading the way, Amazon.
Is this a fake-out to keep investor in the market before the pullback continues, or was that it for the pullback?
The price of oil and copper again fell yesterday and the 2.1% GDP report yesterday didn't help the economic outlook any. That came inline with estimates so it wasn't a surprise, but is it showing a crack in economic growth?
And look what's going on here. The 90-day bond yield briefly inverted above the 10-year T-Note yield on Thursday but the reversal in stocks and bonds had it close fairly close to each other and this chart shows the yields being equal. But here we are again dealing with another possible bout of yield curve inversion.
So we have been anticipating an economic slowdown this year, if not an all-out recession, because of that yield curve inversion last year. Is the coronavirus now hastening those chances as the world cringes at the possibility of the virus's impact?
We're seeing a lot of intraday reversals lately showing investors are little uncertain. They don't want to miss the rally if it is going to continue, yet many of them know a more meaningful pullback is likely due, so they seem to be jumping back and forth - not only day by day, but hour by hour recently.
The S&P 500 (C-fund) opened sharply lower but as we have seen several times already this year, the open doesn't tend to tell us what kind of a day we are going to end up with. The late rally, and actually subsequent after hours move higher on Amazon and IBM's moves, pushes the index back above the 20-day EMA and into the rising trading channel.
The DWCPF (S-fund) also avoided a large early loss by rallying late and closing with a modest gain. The 50-day EMA has held again, so is this pullback - as small as it has been - completed for now? It is still below that trading channel and that's one red flag, but the 50-day EMA holding is huge in a bull market.
The Dow Transportation Index was plummeting early but closed with a moderate 0.66% loss, but on the chart a large positive reversal kangaroo tail was formed. It is still below the 50-day EMA and in the new short-term descending trading channel - two red flags.
The EFA (I-fund) was down slightly and with the wild swings in U.S. stocks while the overseas markets are sleeping, it is getting tougher for the TSP to put a price on the I-fund each day. It closed right on the 50-day EMA and there's still a large open gap above that may need attention.
The AGG (bonds / F-fund) was up slightly but like stocks reversing higher, bonds reversed lower setting up a possible short term dip for the F-fund. Regardless, this is a bullish chart. It's just in need of a rest.
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
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.
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[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[TD][/TD]
[TD="align: center"]
[/TR]
[/TABLE]
Over the last few years we've talked about how FAANG stocks have been holding the market up and that couldn't be any more true today. FAANG being Facebook, Amazon, Apple, Netflix, and Google. There's another acronym used that adds Microsoft and it's called MAGA - Microsoft, Amazon, Google, and Apple. These are still the stocks leading the way while about 1/3 of the S&P 500 is in a correction (down 10% or more).
Amazon's earnings after the bell sent its stock price and the index futures soaring in after hours again. Microsoft did it on Thursday and now we'll start Friday with a big boost from another mega-stock leading the way, Amazon.
Is this a fake-out to keep investor in the market before the pullback continues, or was that it for the pullback?
The price of oil and copper again fell yesterday and the 2.1% GDP report yesterday didn't help the economic outlook any. That came inline with estimates so it wasn't a surprise, but is it showing a crack in economic growth?
And look what's going on here. The 90-day bond yield briefly inverted above the 10-year T-Note yield on Thursday but the reversal in stocks and bonds had it close fairly close to each other and this chart shows the yields being equal. But here we are again dealing with another possible bout of yield curve inversion.
So we have been anticipating an economic slowdown this year, if not an all-out recession, because of that yield curve inversion last year. Is the coronavirus now hastening those chances as the world cringes at the possibility of the virus's impact?
We're seeing a lot of intraday reversals lately showing investors are little uncertain. They don't want to miss the rally if it is going to continue, yet many of them know a more meaningful pullback is likely due, so they seem to be jumping back and forth - not only day by day, but hour by hour recently.
The S&P 500 (C-fund) opened sharply lower but as we have seen several times already this year, the open doesn't tend to tell us what kind of a day we are going to end up with. The late rally, and actually subsequent after hours move higher on Amazon and IBM's moves, pushes the index back above the 20-day EMA and into the rising trading channel.
The DWCPF (S-fund) also avoided a large early loss by rallying late and closing with a modest gain. The 50-day EMA has held again, so is this pullback - as small as it has been - completed for now? It is still below that trading channel and that's one red flag, but the 50-day EMA holding is huge in a bull market.
The Dow Transportation Index was plummeting early but closed with a moderate 0.66% loss, but on the chart a large positive reversal kangaroo tail was formed. It is still below the 50-day EMA and in the new short-term descending trading channel - two red flags.
The EFA (I-fund) was down slightly and with the wild swings in U.S. stocks while the overseas markets are sleeping, it is getting tougher for the TSP to put a price on the I-fund each day. It closed right on the 50-day EMA and there's still a large open gap above that may need attention.
The AGG (bonds / F-fund) was up slightly but like stocks reversing higher, bonds reversed lower setting up a possible short term dip for the F-fund. Regardless, this is a bullish chart. It's just in need of a rest.
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
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.
