It was another mixed day, very choppy as well depending on the index, with some new highs sprinkled in there as well. The Dow ended the day with a healthy 220-point gain and led the big three indices. The S&P 500 was up modestly, fighting of some earlier losses, and the Nasdaq pushed off its morning lows but still closed with a small loss. Yields rallied early but faded late to close slightly lower, the dollar rolled over and that helped produce some nice gains in things like oil and gold, and of course the I-fund.
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The futures shot straight up after the CPI report was released an hour before the opening bell yesterday, as it showed some easing inflationary concerns. However the action was rather odd afterward. Once the opening bell rang on Wednesday, the CPI boost was over and we saw very sharp selling, especially in the small caps. That lasted a couple of hours, and as if someone rang another bell, the buyers stepped up and reversed, in this case the Russell 2000 futures, more than 30-points or 1.5% off the morning low.
I'm not sure why the switch, but obviously dip buyers can't stand to see the slightest pullback before jumping in and they started buying just before lunchtime ET.
These buyers are doing so while facing some serious concerns, and the market really is climbing a wall of worry. The delta variant has many people running around scared, now national mask mandates may be coming, as well as localized lockdowns again, and places where unvaccinated people are not welcomed, which could account for a large portion of the population. I'm not sure how an economy can thrive under those conditions, but the stock market seems unfazed. Did I mention the Taliban has been attempting to take control of Afghanistan again sparking talk of us jumping back into that again?
Internally it was quite positive yesterday, particularly on the NYSE, and the Nasdaq saw some positive numbers despite the modest loss in the index on Wednesday. One warning was that the new lows was back over triple digits on the Nasdaq yesterday.
The 10-year Treasury Yield jumped after the CPI report, but backed off later to close just below that 44-day average we've been watching. Bonds have pulled back sharply recently and yesterday could be another turning point, but we get the PPI (Producer Price Index) today, and that could change things again.
The dollar seems to have hit a roadblock near the July highs, and there is a large gap that could need filling down near 24.8. The pullback helped oil to a second day of solid gains after its sharp pullback.
Here's another notch in the proverbial wall of worry. The Dallas Fed president said yesterday, if the economy continues on its path into the September FOMC meeting, he would be in favor of announcing a plan to taper their bond buying starting in October. That should shake things up and certainly be a test for this resilient market. if that happens, investors won't wait until October to start selling. We could start seeing good economic news get sold again.
The S&P 500 (C-fund) made another new high. Wash, rinse, repeat. That will work until it doesn't, and we had one of those breakdowns in May, June, and July. They don't tend to last every long, but is Augusts' coming soon?
The DWCPF (S-fund) fell sharply early, but the bulls need not worry because the dip buyers are never far away. The good news, the 50-day EMA seems to have held yet again (3rd in last 3 weeks). The bad news is, it has still not closed above that red resistance line since the first week in July.
The EFA (EAFE Index / I-fund) gapped up when the dollar rolled over after the CPI report came out. It looks like a test of the prior highs is on the agenda, but will that mean a double top pullback is coming?
The Dow Transportation Index posted back to back big gains to do some technical damage control by getting back above, not only that 100-day EMA we've been watching, but also the 50-day average, all in one day. This could change things.
The BND (bonds / F-fund) was up slightly after yields reversed from big gains, down to a small loss. It seems to be trying to hold here at the 50-day EMA, so maybe a short-term bounce is due here in the F-fund.
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
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.
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The futures shot straight up after the CPI report was released an hour before the opening bell yesterday, as it showed some easing inflationary concerns. However the action was rather odd afterward. Once the opening bell rang on Wednesday, the CPI boost was over and we saw very sharp selling, especially in the small caps. That lasted a couple of hours, and as if someone rang another bell, the buyers stepped up and reversed, in this case the Russell 2000 futures, more than 30-points or 1.5% off the morning low.
I'm not sure why the switch, but obviously dip buyers can't stand to see the slightest pullback before jumping in and they started buying just before lunchtime ET.
These buyers are doing so while facing some serious concerns, and the market really is climbing a wall of worry. The delta variant has many people running around scared, now national mask mandates may be coming, as well as localized lockdowns again, and places where unvaccinated people are not welcomed, which could account for a large portion of the population. I'm not sure how an economy can thrive under those conditions, but the stock market seems unfazed. Did I mention the Taliban has been attempting to take control of Afghanistan again sparking talk of us jumping back into that again?
Internally it was quite positive yesterday, particularly on the NYSE, and the Nasdaq saw some positive numbers despite the modest loss in the index on Wednesday. One warning was that the new lows was back over triple digits on the Nasdaq yesterday.
The 10-year Treasury Yield jumped after the CPI report, but backed off later to close just below that 44-day average we've been watching. Bonds have pulled back sharply recently and yesterday could be another turning point, but we get the PPI (Producer Price Index) today, and that could change things again.
The dollar seems to have hit a roadblock near the July highs, and there is a large gap that could need filling down near 24.8. The pullback helped oil to a second day of solid gains after its sharp pullback.
Here's another notch in the proverbial wall of worry. The Dallas Fed president said yesterday, if the economy continues on its path into the September FOMC meeting, he would be in favor of announcing a plan to taper their bond buying starting in October. That should shake things up and certainly be a test for this resilient market. if that happens, investors won't wait until October to start selling. We could start seeing good economic news get sold again.
The S&P 500 (C-fund) made another new high. Wash, rinse, repeat. That will work until it doesn't, and we had one of those breakdowns in May, June, and July. They don't tend to last every long, but is Augusts' coming soon?
The DWCPF (S-fund) fell sharply early, but the bulls need not worry because the dip buyers are never far away. The good news, the 50-day EMA seems to have held yet again (3rd in last 3 weeks). The bad news is, it has still not closed above that red resistance line since the first week in July.
The EFA (EAFE Index / I-fund) gapped up when the dollar rolled over after the CPI report came out. It looks like a test of the prior highs is on the agenda, but will that mean a double top pullback is coming?
The Dow Transportation Index posted back to back big gains to do some technical damage control by getting back above, not only that 100-day EMA we've been watching, but also the 50-day average, all in one day. This could change things.
The BND (bonds / F-fund) was up slightly after yields reversed from big gains, down to a small loss. It seems to be trying to hold here at the 50-day EMA, so maybe a short-term bounce is due here in the F-fund.
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
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.
