Stocks tumbled again on Tuesday as the price of oil spiked as supply issues rise amid the Russia-Ukraine war. The Dow lost another 598-points so the 2-day pullback has erased last Thursday's big gains. The small caps and the I-fund lagged on poor performances from regional banks because of the drop in yields, and a jump in the dollar. The swings remain wide making for a very vulnerable market, but that also means snap back rallies can be big, so don't blink and stay nimble. We're in a downtrend and we don't know when that will end, so having some money on the sidelines may come in handy at some point.
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The S&P 500 (C-fund) seems to be stalling at that descending resistance line and 200-day EMA once again. This is what happens in a down trending market. The trend should be your friend and this trend is no friend to the bulls right now.
The DWCPF (small caps / S-fund) is also threatening to make another lower high as it rides below its descending resistance line.
Longer term the weekly S-fund chart may look to find support near 1700 where an old resistance line meets up with the 200 week EMA.
The EFA (I-fund) made its lowest close of the year yesterday and the 0.77% rally in the dollar was a brutal headwind to the international stock fund.
BND (Bonds / F-fund) rallied again, although it did close well off the highs after it filled another open gap. The blue gaps are filled, and the red ones are still open and potential targets.
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 first of the two big stories yesterday was the sharp decline in bond yields. How can bond yields tank when the Fed is getting ready to raise interest rates? Well, maybe they won't. The bond market can often call the shots. The 10-year yield fell down near 1.7% after a second gap down opening. The effects of various companies cutting off Russia may hit the economy, so suddenly economic growth is as much of a concern as inflation. The Atlanta Fed just lowered their 1st quarter GDP estimate to 0.0%.
This data changes all day long but it is a snap shot from yesterday showing the probability of the Fed's move on rates in the next meeting and we can see just how much things have changed. The chances of the Fed not raising rates at all went from 0% to 7%. That's still a long shot, while the chances of a 0.50% hike, which we thought was becoming very possible, is down to 0%. So, the market is fairly certain, at this given point, of just a 0.25% hike at the March meeting, but the chances of no hike is starting to raise.
The dollar rallied on this change but surprising, with the dollar moving up, commodities are also moving higher.
Oil was the other big story as it was up over $10 a barrel at one point yesterday before closing up $7.69. The possibility of cutting off Russia's supply was later eased after word of the U.S. tapping their oil reserves to ease the pain of higher gas prices.
Gold and bond prices were also up so the safety trade was in full force.
There were some strong earnings reported by a few companies after the bell yesterday, but not from any major market movers. Nordstrom was up 35% after hours. Ross, Salesforce, and Sofi were all up nicely as well.
I am writing this before the State of the Union Address on Tuesday night and sometimes hearing a positive message from the President can give the market an optimistic boost, but that could be short-lived.
Fed Chair Jerome Powell will be testifying before congress today, and of course the market will evaluate every word. It's mostly a grandstanding opportunity for congress members to try to look smart in front of their constituents, but it could have an impact.
This data changes all day long but it is a snap shot from yesterday showing the probability of the Fed's move on rates in the next meeting and we can see just how much things have changed. The chances of the Fed not raising rates at all went from 0% to 7%. That's still a long shot, while the chances of a 0.50% hike, which we thought was becoming very possible, is down to 0%. So, the market is fairly certain, at this given point, of just a 0.25% hike at the March meeting, but the chances of no hike is starting to raise.
The dollar rallied on this change but surprising, with the dollar moving up, commodities are also moving higher.
Oil was the other big story as it was up over $10 a barrel at one point yesterday before closing up $7.69. The possibility of cutting off Russia's supply was later eased after word of the U.S. tapping their oil reserves to ease the pain of higher gas prices.
Gold and bond prices were also up so the safety trade was in full force.
There were some strong earnings reported by a few companies after the bell yesterday, but not from any major market movers. Nordstrom was up 35% after hours. Ross, Salesforce, and Sofi were all up nicely as well.
I am writing this before the State of the Union Address on Tuesday night and sometimes hearing a positive message from the President can give the market an optimistic boost, but that could be short-lived.
Fed Chair Jerome Powell will be testifying before congress today, and of course the market will evaluate every word. It's mostly a grandstanding opportunity for congress members to try to look smart in front of their constituents, but it could have an impact.
The S&P 500 (C-fund) seems to be stalling at that descending resistance line and 200-day EMA once again. This is what happens in a down trending market. The trend should be your friend and this trend is no friend to the bulls right now.
The DWCPF (small caps / S-fund) is also threatening to make another lower high as it rides below its descending resistance line.
Longer term the weekly S-fund chart may look to find support near 1700 where an old resistance line meets up with the 200 week EMA.
The EFA (I-fund) made its lowest close of the year yesterday and the 0.77% rally in the dollar was a brutal headwind to the international stock fund.
BND (Bonds / F-fund) rallied again, although it did close well off the highs after it filled another open gap. The blue gaps are filled, and the red ones are still open and potential targets.
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.
