Stocks opened lower on Tuesday after some nervousness over those regional banks again. Meanwhile the back and forth in bonds, the dollar, and stocks is giving investors a headache. The Dow lost 367-points and losses were between 1% and 2% despite the indices closing off their lows of the day after some afternoon buying. Today is day #2 of the FOMC meeting and expectations are for another 0.25% interest rate hike. What isn't expected is what the Fed may say about their next move.
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The intraday action seems purposely designed to confuse us average investors / market timers. Why stocks didn't sell off on Monday after the JP Morgan Chase takeover of First Republic Bank (FR), yet on Tuesday it did, was likely meant to keep us comfortable for another day so insiders or money managers could do some heavy selling into the complacency. Or they wanted us selling so they could buy today's Fed decision. W don't know, but having done this for a long time, paranoia comes with the business. These big banks care about one thing at the end of the day... making money for "their" clients or their shareholders, and they are very good at it, but it comes at the expense of us - people trying to do this on their own.
I'm sure Jamie Dimon is a nice guy, but in an interview after taking over First Republic on Monday, he suggested the banking crisis is over. One day later we get this - another breakdown in the Regional Banks.
And of course the S-fund is loaded with small regional banks so it took another 1.8% loss yesterday after a 3-day relief rally that likely sucked in more people.
The dollar looked like it was about to breakout above that 50-day EMA after breaking out above that F-flag on Monday, but like everything else yesterday, it reversed course in afternoon trading and closed down on the day. It did come to rest on the old resistance line which, once broken, tends to act as support. Purely looking at the chart and not as an economist, I would say this chart wants to go higher, but the Fed will have the final say today.
The 10-year Treasury yield also reversed Mondays big gains yesterday as the inverted head and shoulders pattern continues to form the right shoulder. Like the dollar, this pattern would suggest to me that it wants to go higher. The Fed could do that by remaining more hawkish than expected.
After today's Fed meeting, we'll get Apple's earnings on Thursday, and then the April jobs report on Friday.
The S&P 500 (C-fund) did produce another double top pullback after Monday's rally failed near the February high. What would be a proper pullback size after we just had one down to the 50-day EMA? Obviously the Fed will have its impact, but we can't always trust the initial move after a Fed meeting. Sometimes the gains or losses after a Fed meeting are quickly reversed in the days ahead, so all we can do is speculate and roll the dice, or stand aside and wait to see what happens. The PMO indicator moved back under its moving average, so the oversold bounce may be done.
The EFA (I-fund) gapped down on the big early rally in the dollar yesterday, but as we mentioned above, that rally faded and the dollar actually closed down on the day. A gap was opened overhead, and with the plethora of open gaps below, the next short-term direction is a crap shoot. It did manage to close back above the 20-day EMA after falling below it early, so the bulls did buy aggressively on the dip again.
BND (Bonds / F-fund) is a mirror image of the 10-year yield, and the head and shoulders pattern does look bearish here for bonds. However, there is strong support near 73 and the larger formation is an inverted head and shoulders (not marked) and that would suggest a longer term bullish outlook. Again, the Fed may answer a lot of questions on this chart, but it may take a couple of days to sort out the mess.
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 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.
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The intraday action seems purposely designed to confuse us average investors / market timers. Why stocks didn't sell off on Monday after the JP Morgan Chase takeover of First Republic Bank (FR), yet on Tuesday it did, was likely meant to keep us comfortable for another day so insiders or money managers could do some heavy selling into the complacency. Or they wanted us selling so they could buy today's Fed decision. W don't know, but having done this for a long time, paranoia comes with the business. These big banks care about one thing at the end of the day... making money for "their" clients or their shareholders, and they are very good at it, but it comes at the expense of us - people trying to do this on their own.
I'm sure Jamie Dimon is a nice guy, but in an interview after taking over First Republic on Monday, he suggested the banking crisis is over. One day later we get this - another breakdown in the Regional Banks.
And of course the S-fund is loaded with small regional banks so it took another 1.8% loss yesterday after a 3-day relief rally that likely sucked in more people.
The dollar looked like it was about to breakout above that 50-day EMA after breaking out above that F-flag on Monday, but like everything else yesterday, it reversed course in afternoon trading and closed down on the day. It did come to rest on the old resistance line which, once broken, tends to act as support. Purely looking at the chart and not as an economist, I would say this chart wants to go higher, but the Fed will have the final say today.
The 10-year Treasury yield also reversed Mondays big gains yesterday as the inverted head and shoulders pattern continues to form the right shoulder. Like the dollar, this pattern would suggest to me that it wants to go higher. The Fed could do that by remaining more hawkish than expected.
After today's Fed meeting, we'll get Apple's earnings on Thursday, and then the April jobs report on Friday.
The S&P 500 (C-fund) did produce another double top pullback after Monday's rally failed near the February high. What would be a proper pullback size after we just had one down to the 50-day EMA? Obviously the Fed will have its impact, but we can't always trust the initial move after a Fed meeting. Sometimes the gains or losses after a Fed meeting are quickly reversed in the days ahead, so all we can do is speculate and roll the dice, or stand aside and wait to see what happens. The PMO indicator moved back under its moving average, so the oversold bounce may be done.
The EFA (I-fund) gapped down on the big early rally in the dollar yesterday, but as we mentioned above, that rally faded and the dollar actually closed down on the day. A gap was opened overhead, and with the plethora of open gaps below, the next short-term direction is a crap shoot. It did manage to close back above the 20-day EMA after falling below it early, so the bulls did buy aggressively on the dip again.
BND (Bonds / F-fund) is a mirror image of the 10-year yield, and the head and shoulders pattern does look bearish here for bonds. However, there is strong support near 73 and the larger formation is an inverted head and shoulders (not marked) and that would suggest a longer term bullish outlook. Again, the Fed may answer a lot of questions on this chart, but it may take a couple of days to sort out the mess.
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 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.
