Stocks continue their pattern of strong opens and weak closes, which generally isn't a very bullish development, but so far the bears haven't taken advantage of this negative trend as the indices refuse to give up their support. After yesterday's losses and the futures opening down on Wednesday evening, that could happen today for all we know, but the next week has a very decent seasonal record, that the bears may be reluctant to put much pressure on until after the election.
Microsoft and Meta reported earnings last night and neither were setting the futures on fire. Microsoft was down a fraction of a percent after hours while Meta was down 3% so that's putting some pressure on the futures, but like Alphabet (GOOG) yesterday, their big early gains turned into OK gains and it didn't help the S&P 500 or Nasdaq stay positive on the day.
GOOG ran all the way up near 184, which conveniently filled an open gap before it rolled over again and closed at 176. So profits are being taken quickly, but in this case the inverted head and shoulders pattern, and the open gap all delivered on what we would expect from those technical set ups. The inverted H&S actually hit its upside target already with that move up near 184, and the gap held as resistance. Now the open gap is down near 170 again where it could test the old resistance line.
The 10-year Treasury Yield fell sharply early after the Q3 GDP came in lower than expected (2.8% vs. 3.0%), then rebounded late after housing data came in a lot better than expected. So the early breakdown in the rising channel was recaptured before the close. No harm, no foul on the recent ascending trend. The stock market is getting cranky about this.
It's tough to deny the historic strength of early November, and this next chart from sentimenTrader.com represents all years, not just elections years. Seasonality favors the bulls for the next week, but again the plethora of catalysts coming up in the next week including more Mag 7 earnings, key economic data, and the election results, it's difficult to lean on just seasonality.
Chart provided courtesy of www.sentimentrader.com
And if we take a look at November during election years, our projections may be swayed by whether we think this is an "open field" election, or a "sitting president running" situation. It's more of a none of the above with the current president bowing out and the VP being given the candidacy. But look at the difference between those two different lines in November, with green meaning sitting president running, and the red line an open field.
We get the PCE Prices inflation report this morning, Apple's earnings after the bell, and then the October jobs report comes out on Friday morning. Expectations are looking for a gain of about 125,000 jobs for October, and the unemployment rate estimates are 4.1% to 4.2%.
The S&P 500 (C-fund) continues to slide sideways above it 20-day EMA despite big headlines coming from both directions. The 5800 area has been in the picture for about a month and now rising support is crossing the key 20-day EMA right there, and we could either see the bulls take another stand like they did in early October, or we could see a fake out break down that comes back quickly like in early September to shake out some weaker bulls, or this could be a topping period. It's tough to say but the bulls may be running out of time to keep the positive trend alive.
The DWCPF (S-fund) led again, not with a gain, but a smaller loss. That's a good thing as far as seeing the broader market indices getting a bid while some large caps get sold. I didn't like the look of yesterday's negative reversal candlestick and they are starting to pile up, but so far they haven't done a lot of damage. I don't want too get complacent with this recent neg-rev, but we'll know more if that 20-day EMA is tested again.
The I-fund: The EFA tracking ETF was down 0.65% yesterday and the "ex USA ex China ex Hong Kong Index" was down 0.25%. You can see the TSP's eventual final daily price and return posted on our site each evening.
The trend is down and support is getting tested again at the September low. The rising dollar has done its damage and the I-fund may need that to come back down quickly.
BND (Bonds / F-fund) was down again as it flirts with that old open gap area. The narrowing falling wedge and support from the filled gap near 72.80 could mean this is close to bottoming, but if it isn't, the stock will let us know.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
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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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Microsoft and Meta reported earnings last night and neither were setting the futures on fire. Microsoft was down a fraction of a percent after hours while Meta was down 3% so that's putting some pressure on the futures, but like Alphabet (GOOG) yesterday, their big early gains turned into OK gains and it didn't help the S&P 500 or Nasdaq stay positive on the day.
GOOG ran all the way up near 184, which conveniently filled an open gap before it rolled over again and closed at 176. So profits are being taken quickly, but in this case the inverted head and shoulders pattern, and the open gap all delivered on what we would expect from those technical set ups. The inverted H&S actually hit its upside target already with that move up near 184, and the gap held as resistance. Now the open gap is down near 170 again where it could test the old resistance line.
The 10-year Treasury Yield fell sharply early after the Q3 GDP came in lower than expected (2.8% vs. 3.0%), then rebounded late after housing data came in a lot better than expected. So the early breakdown in the rising channel was recaptured before the close. No harm, no foul on the recent ascending trend. The stock market is getting cranky about this.
It's tough to deny the historic strength of early November, and this next chart from sentimenTrader.com represents all years, not just elections years. Seasonality favors the bulls for the next week, but again the plethora of catalysts coming up in the next week including more Mag 7 earnings, key economic data, and the election results, it's difficult to lean on just seasonality.
Chart provided courtesy of www.sentimentrader.com
And if we take a look at November during election years, our projections may be swayed by whether we think this is an "open field" election, or a "sitting president running" situation. It's more of a none of the above with the current president bowing out and the VP being given the candidacy. But look at the difference between those two different lines in November, with green meaning sitting president running, and the red line an open field.
We get the PCE Prices inflation report this morning, Apple's earnings after the bell, and then the October jobs report comes out on Friday morning. Expectations are looking for a gain of about 125,000 jobs for October, and the unemployment rate estimates are 4.1% to 4.2%.
The S&P 500 (C-fund) continues to slide sideways above it 20-day EMA despite big headlines coming from both directions. The 5800 area has been in the picture for about a month and now rising support is crossing the key 20-day EMA right there, and we could either see the bulls take another stand like they did in early October, or we could see a fake out break down that comes back quickly like in early September to shake out some weaker bulls, or this could be a topping period. It's tough to say but the bulls may be running out of time to keep the positive trend alive.
The DWCPF (S-fund) led again, not with a gain, but a smaller loss. That's a good thing as far as seeing the broader market indices getting a bid while some large caps get sold. I didn't like the look of yesterday's negative reversal candlestick and they are starting to pile up, but so far they haven't done a lot of damage. I don't want too get complacent with this recent neg-rev, but we'll know more if that 20-day EMA is tested again.
The I-fund: The EFA tracking ETF was down 0.65% yesterday and the "ex USA ex China ex Hong Kong Index" was down 0.25%. You can see the TSP's eventual final daily price and return posted on our site each evening.
The trend is down and support is getting tested again at the September low. The rising dollar has done its damage and the I-fund may need that to come back down quickly.
BND (Bonds / F-fund) was down again as it flirts with that old open gap area. The narrowing falling wedge and support from the filled gap near 72.80 could mean this is close to bottoming, but if it isn't, the stock will let us know.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
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.
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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