Stocks bounced back from Friday's negative reversal to post big gains, despite another sell-off in Apple. The gains broke a 4-day losing streak for the S&P 500 and Nasdaq. The Dow gained over 400-points and it looks like the bulls are off to the races - except that some of the charts still have a little work to do to get out of last week's mess. Small caps lagged but were positive on the day. Bonds were down as yields moved higher.
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Earnings are still coming out but most of the market movers have reported already. The Fed is probably done with raising interest rates at least until their November meeting. We have entered the summer doldrums months of August and September so now the market may be data driven. We got the July jobs report already so the next catalyst will be July's CPI report which will come out on Thursday.
I suppose what we want to know now is if stocks can continue to rally with this lack of catalysts, or if the market needs a few more weeks to digest the recent 5 month winning streak for stocks?
According to sentimenTrader.com:
"There have been only 29 times when the S&P 500 Index showed a calendar monthly gain for five consecutive months. This has tended to be followed by favorable stock market action over the ensuing nine months. A 2nd Quarter Trifecta occurs when the S&P 500 shows a monthly gain for April, May, and June during the same year. This tends to be a favorable sign for stocks over the next nine months (i.e., through March of the following year)."
Right now there is a lot of talk about Apple. We often mention the axiom "As goes Apple, so goes the market." Well, Apple is going down and is now about10% off its recent highs. That of course is concerning if the rest of the market is going to follow. Perhaps filling the small gap down by 176 is the target, or...
... perhaps it had just gotten too far ahead of itself as it was already up tremendously (60%) for the year when it peaked in July. The longer term chart above shows that move, and some potential pullback levels, a couple of which it is flirting with now.
The Yield on the 10-year Treasury moved up after Friday's big decline. The prior peak may now act as support / resistance, depending on which side of that line it is trading. It is currently below it, that is, the 4.1% area. There's also a small open gap near 4.0% that could be a draw.
The dollar was up slightly, attempting to fill in Friday's open gap. It is below some tough resistance and fell below the rising trading channel. The stock market, especially the I-fund, would prefer this to remain below that resistance line in the 28.50 area.
Again, the July CPI Report comes out on Thursday of this week. It is expected to be up 0.2%, same as June, but the Core CPI is expected to be up a little more, probably because of the rise in oil prices recently.
The S&P 500 (C-fund) bounced back from Friday's strange negative reversal day. Strange because it came out of nowhere. There are some issues here that may be tested right away today, and that is whether it can get back above that support line that it fell below last week. Yesterday's highs came right up to that resistance and stalled. There is an open gap above 4550 so that would be a lure if the bulls can keep Monday's strength going.
DWCPF (S-fund) lagged a bit as the Russell 2000 was only flat on the day. Lower oil prices and a decline in oil services stocks may have been part of the problem. KRE, the Regional Bank ETF, is up against long term resistance right now after a pretty good rally recently. Whether it can break above that resistance could make or break the S-fund in the short-term.
EFA (I-fund) had a good day but it trades smack in the middle of a wide trading channel. There are two major open gaps above and two minor open gaps below. If the dollar can hold below resistance, I can see one or two of those overhead gaps trying to get filled. It's back above the 50-day EMA and perhaps trying to create a higher low.
BND (Bonds / F-fund) was down after Friday's big rally. It's in a descending trading channel below the major moving averages so I have to give the nod to the bonds bears here for now.
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
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Daily Market Commentary Archives
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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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Earnings are still coming out but most of the market movers have reported already. The Fed is probably done with raising interest rates at least until their November meeting. We have entered the summer doldrums months of August and September so now the market may be data driven. We got the July jobs report already so the next catalyst will be July's CPI report which will come out on Thursday.
I suppose what we want to know now is if stocks can continue to rally with this lack of catalysts, or if the market needs a few more weeks to digest the recent 5 month winning streak for stocks?
According to sentimenTrader.com:
"There have been only 29 times when the S&P 500 Index showed a calendar monthly gain for five consecutive months. This has tended to be followed by favorable stock market action over the ensuing nine months. A 2nd Quarter Trifecta occurs when the S&P 500 shows a monthly gain for April, May, and June during the same year. This tends to be a favorable sign for stocks over the next nine months (i.e., through March of the following year)."
Right now there is a lot of talk about Apple. We often mention the axiom "As goes Apple, so goes the market." Well, Apple is going down and is now about10% off its recent highs. That of course is concerning if the rest of the market is going to follow. Perhaps filling the small gap down by 176 is the target, or...
... perhaps it had just gotten too far ahead of itself as it was already up tremendously (60%) for the year when it peaked in July. The longer term chart above shows that move, and some potential pullback levels, a couple of which it is flirting with now.
The Yield on the 10-year Treasury moved up after Friday's big decline. The prior peak may now act as support / resistance, depending on which side of that line it is trading. It is currently below it, that is, the 4.1% area. There's also a small open gap near 4.0% that could be a draw.
The dollar was up slightly, attempting to fill in Friday's open gap. It is below some tough resistance and fell below the rising trading channel. The stock market, especially the I-fund, would prefer this to remain below that resistance line in the 28.50 area.
Again, the July CPI Report comes out on Thursday of this week. It is expected to be up 0.2%, same as June, but the Core CPI is expected to be up a little more, probably because of the rise in oil prices recently.
The S&P 500 (C-fund) bounced back from Friday's strange negative reversal day. Strange because it came out of nowhere. There are some issues here that may be tested right away today, and that is whether it can get back above that support line that it fell below last week. Yesterday's highs came right up to that resistance and stalled. There is an open gap above 4550 so that would be a lure if the bulls can keep Monday's strength going.
DWCPF (S-fund) lagged a bit as the Russell 2000 was only flat on the day. Lower oil prices and a decline in oil services stocks may have been part of the problem. KRE, the Regional Bank ETF, is up against long term resistance right now after a pretty good rally recently. Whether it can break above that resistance could make or break the S-fund in the short-term.
EFA (I-fund) had a good day but it trades smack in the middle of a wide trading channel. There are two major open gaps above and two minor open gaps below. If the dollar can hold below resistance, I can see one or two of those overhead gaps trying to get filled. It's back above the 50-day EMA and perhaps trying to create a higher low.
BND (Bonds / F-fund) was down after Friday's big rally. It's in a descending trading channel below the major moving averages so I have to give the nod to the bonds bears here for now.
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.
