After all was said and done following Microsoft and Google earnings, and the Fed's decision to raise interest rates by 25 basis points, the indices closed about as flat as we have seen them close in a long time. Maybe it's just me but do those intraday charts below look like the market is giving us, or maybe the Fed, the finger? 
A lot of indecision, even while Powell was speaking at the press conference. After being all over the map, the Dow gained 82 points and small caps and the Transports were some of the winners on the day. Bonds were up as yields eased back as the Fed didn't commit to anything for the next couple of meetings.
[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]
Earnings after the closing bell were mixed. Meta was probably the highlight and it was trading sharply higher after hours. Chipolte and Ebay were down but they're not market movers like a FAANG type stock.
The Dow was down more than 130-points at one point yesterday but by the close it was up 82-points making it 13 consecutive positive closes. I post this next chart / info for entertainment purposes, but also to show us what can happen in a runaway market.
The last time the Dow had a 13-day winning streak was in early 1987. There was an 11-day streak that year as well, but 1987 is infamous for the October crash where the Dow lost 23% in one day, and despite an 8 month monster rally, it was only up 2% for the year.
That's what can happen to a bloated market that gets too far ahead of itself. Is that sounding a little familiar as META jumped another 7% after hours despite already being up over 140% for the year?
Let's put this in the "it's different this time" category as interest rates and Treasury yields move higher. The yield on the 10-year Treasury had been in a 35 year downtrend until last year when inflation became a problem and the Fed started to raise interest rates. We have to wonder if everything that was normal for the last 35 years will continue to be normal as far indicators, chart patterns, etc., or will it be different this time because... well things are different. A long term trend change in yields is something new.
Higher yields can be an issue for stocks since TINA (There Is No Alternative) is no longer accurate as you can get over 5% in a bond, long or short term. based on the chart above, the real trouble might come when yields start to fall back down, usually as a result of some kind of economic slowdown, as you see in the charts.
The dollar hit that wall of resistance this week and rolled back over. While the I-fund has been hanging around the top of its wide trading channel, a falling dollar may keep this fund perky going forward. The gaps below on the EFA chart below are concerning in the short-term but the trend in the dollar is now down and that's a good thing for the I-fund.
The Dow Transportation Index, one of the main market leaders, blasted off yesterday thanks to some big gains in the railroad stocks. The channel did not break on the recent modest dip, so the rising trend is still going. Dow Theorists will love this.
We will get the PCE Prices and Personal Income and Spending reports tomorrow and it's something the Fed watches closely, but the next FOMC meeting isn't until September so its impact may not be felt for a while. Still, investors know the Fed is watching and could determine any further rate hikes (or not.)
The S&P 500 (C-fund) was flat but surviving another Fed meeting gives investors another couple of months before they have to deal with Jerome Powell again. The trend is up, but getting more and more extended, although it has actually moved sideways for the last 6 days creating another small base to rally off. Will the open gap get filled first? Will it eventually test the bottom of the channel again? Very possibly, but it isn't right now.
DWCPF (S-fund) led the TSP funds with a 0.47% gain as it hovers above the old resistance line that seem to be acting as support now. There's an open gap below on this chart too, but it would have to fall through that new support to fill it at this point.
BND (bonds / F-fund) rallied higher on he Fed's less hawkish rhetoric. It's back testing the bottom of that red bear flag, but in the process it has created a nice looking bull flag. Here as well, the question is whether it can break higher before filling in the obvious open gap near 72?
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
Daily Market Commentary Archives
To get weekly or daily notifications when we post new commentary, sign up HERE.
Thanks so much 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.
A lot of indecision, even while Powell was speaking at the press conference. After being all over the map, the Dow gained 82 points and small caps and the Transports were some of the winners on the day. Bonds were up as yields eased back as the Fed didn't commit to anything for the next couple of meetings.[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]
Earnings after the closing bell were mixed. Meta was probably the highlight and it was trading sharply higher after hours. Chipolte and Ebay were down but they're not market movers like a FAANG type stock.
The Dow was down more than 130-points at one point yesterday but by the close it was up 82-points making it 13 consecutive positive closes. I post this next chart / info for entertainment purposes, but also to show us what can happen in a runaway market.
The last time the Dow had a 13-day winning streak was in early 1987. There was an 11-day streak that year as well, but 1987 is infamous for the October crash where the Dow lost 23% in one day, and despite an 8 month monster rally, it was only up 2% for the year.
That's what can happen to a bloated market that gets too far ahead of itself. Is that sounding a little familiar as META jumped another 7% after hours despite already being up over 140% for the year?
Let's put this in the "it's different this time" category as interest rates and Treasury yields move higher. The yield on the 10-year Treasury had been in a 35 year downtrend until last year when inflation became a problem and the Fed started to raise interest rates. We have to wonder if everything that was normal for the last 35 years will continue to be normal as far indicators, chart patterns, etc., or will it be different this time because... well things are different. A long term trend change in yields is something new.
Higher yields can be an issue for stocks since TINA (There Is No Alternative) is no longer accurate as you can get over 5% in a bond, long or short term. based on the chart above, the real trouble might come when yields start to fall back down, usually as a result of some kind of economic slowdown, as you see in the charts.
The dollar hit that wall of resistance this week and rolled back over. While the I-fund has been hanging around the top of its wide trading channel, a falling dollar may keep this fund perky going forward. The gaps below on the EFA chart below are concerning in the short-term but the trend in the dollar is now down and that's a good thing for the I-fund.
The Dow Transportation Index, one of the main market leaders, blasted off yesterday thanks to some big gains in the railroad stocks. The channel did not break on the recent modest dip, so the rising trend is still going. Dow Theorists will love this.
We will get the PCE Prices and Personal Income and Spending reports tomorrow and it's something the Fed watches closely, but the next FOMC meeting isn't until September so its impact may not be felt for a while. Still, investors know the Fed is watching and could determine any further rate hikes (or not.)
The S&P 500 (C-fund) was flat but surviving another Fed meeting gives investors another couple of months before they have to deal with Jerome Powell again. The trend is up, but getting more and more extended, although it has actually moved sideways for the last 6 days creating another small base to rally off. Will the open gap get filled first? Will it eventually test the bottom of the channel again? Very possibly, but it isn't right now.
DWCPF (S-fund) led the TSP funds with a 0.47% gain as it hovers above the old resistance line that seem to be acting as support now. There's an open gap below on this chart too, but it would have to fall through that new support to fill it at this point.
BND (bonds / F-fund) rallied higher on he Fed's less hawkish rhetoric. It's back testing the bottom of that red bear flag, but in the process it has created a nice looking bull flag. Here as well, the question is whether it can break higher before filling in the obvious open gap near 72?
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
Daily Market Commentary Archives
To get weekly or daily notifications when we post new commentary, sign up HERE.
Thanks so much 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.
