Stocks were mixed again on Tuesday, giving up some early gains and closing near to the lows of the day. The Dow lagged with only 10 of its 30 stocks up on the day. Another rally in the dollar didn't help stocks but an early rally in yields was reversed by the close and bonds closed with a rare up day. Small caps were down with small energy and regional bank stocks falling yesterday.
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The push to send the S&P 500 into negative territory by the close kept the string of consecutive negative Tuesdays going in August - that's four in a row, after eight straight positive Mondays.
With Fed Chair Jerome Powell speaking at the Jackson Hole symposium on Friday and Nvidia reporting earnings after the bell today, I am reluctant to speculate too much about how the week plays out. There are some outcomes that we know could move the market and if both "events" produce favorable results, stocks could be bottoming here near the 200-day EMA on many charts.
If they both produce unexpected bearish or hawkish results, stocks could rollover and create a new leg down below support.
The other options is that one will be favorable, and the other not so favorable, and the then bull / bear battle would ensue going forward. Not exactly insightful, but that's about how it could go.
The Fed has been given some fodder with stronger economic data recently to continue their more hawkish stance as the last thing they want to happen is to see inflation rebound after they did a decent jobs of curbing it. Of course in the process they raised interest rates at a rapid pace and they are reducing their balance sheet given the market some fits.
The rally earlier this year was triggered by two key catalysts: First was speculation that the Fed is done, or near done, raising rates so anything to the contrarian would be a problem for the stock market. Secondly, the giant rally from Nvidia after their prior quarterly report helped tech to new highs as the A-I frenzy began. Now those two catalysts are in jeopardy or at least will be under the microscope this week.
After rallying 8.5% on Monday, the A-I favorite Nvidia was down yesterday after hitting a double top in the morning, and creating a negative reversal by the close. You can see that the short-term resistance looks challenging, but this new market leader can be explosive if it impresses after the bell. Or it could really be a blow to the A-I portion of the tech world if they disappoint because expectations are high.
The good news is that despite all of the negative market action, this is basically holding above its 50-day EMA and it made an intraday new high yesterday. I like the fact that it was down yesterday and not running away into earnings, which could have set up a sell the news reaction.
The Yield on the 10-year Treasury continues to be stubbornly buoyant but the longer term chart shows some potential resistance. Anything hawkish from the Fed on Friday could see this shred right through resistance, but maybe the resistance is trying to tell us that the Fed is ready to be more accommodative and more dovish going forward.
The rally in the dollar yesterday pushed it back above that longer-term resistance line, and that may not be a good recipe for the stock market.
The action isn't great but yesterday's 12-point loss in the S&P 500 came on the heals of the two-day rally that took the S&P from its lows on Thursday of 4370, to yesterday's high of 4419 or over 1%, but as you will see in the S&P 500 down below, the 50-day EMA and other resistance is now an obstacle.
The S&P 500 (C-fund) made a higher high, and a higher low over Monday's action so there is a short-term rising trend, but the close near the lows of the day created a negative reversal day, and that's not usually a good way to start the next day. You can see that the chart is still decisively below the August descending resistance line and the 50-day EMA, so the bears have some advantage, while the bulls are hoping for some positive catalysts after the bell today from Nvidia, and on Friday from the Fed.
DWCPF (S-fund) bounced off its 200-day EMA last week but for a second straight day it stalled at the the old broken resistance line. Some churning back and forth in this area isn't the worst thing that could happen as long as it hangs around the 200-day EMA and doesn't create a bear flag in the process, which unfortunately is very possible given the sharpness of the decline this month that created a possible bearish flag pole.
EFA (I-fund) couldn't hold onto a strong open yesterday as the dollar rallied to a new high for the year. It's a broken trend on the EFA chart but it does have the 200-day EMA trying to hold it up for now.
BND (Bonds / F-fund) was up modestly in dead-cat bounce fashion, and still lingers below support and all of the major moving averages. The Fed may be able to help at the end of the week, and technically this needs some help/ Getting back above 70.75 is the first order of business.
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
Daily Market Commentary Archives
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Like what you're seeing on TSP Talk? Why not Tell a Friend about us? We'd really appreciate it, and they may too.
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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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[TD="width: 338, align: center"] Daily TSP Funds Return
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The push to send the S&P 500 into negative territory by the close kept the string of consecutive negative Tuesdays going in August - that's four in a row, after eight straight positive Mondays.
With Fed Chair Jerome Powell speaking at the Jackson Hole symposium on Friday and Nvidia reporting earnings after the bell today, I am reluctant to speculate too much about how the week plays out. There are some outcomes that we know could move the market and if both "events" produce favorable results, stocks could be bottoming here near the 200-day EMA on many charts.
If they both produce unexpected bearish or hawkish results, stocks could rollover and create a new leg down below support.
The other options is that one will be favorable, and the other not so favorable, and the then bull / bear battle would ensue going forward. Not exactly insightful, but that's about how it could go.
The Fed has been given some fodder with stronger economic data recently to continue their more hawkish stance as the last thing they want to happen is to see inflation rebound after they did a decent jobs of curbing it. Of course in the process they raised interest rates at a rapid pace and they are reducing their balance sheet given the market some fits.
The rally earlier this year was triggered by two key catalysts: First was speculation that the Fed is done, or near done, raising rates so anything to the contrarian would be a problem for the stock market. Secondly, the giant rally from Nvidia after their prior quarterly report helped tech to new highs as the A-I frenzy began. Now those two catalysts are in jeopardy or at least will be under the microscope this week.
After rallying 8.5% on Monday, the A-I favorite Nvidia was down yesterday after hitting a double top in the morning, and creating a negative reversal by the close. You can see that the short-term resistance looks challenging, but this new market leader can be explosive if it impresses after the bell. Or it could really be a blow to the A-I portion of the tech world if they disappoint because expectations are high.
The good news is that despite all of the negative market action, this is basically holding above its 50-day EMA and it made an intraday new high yesterday. I like the fact that it was down yesterday and not running away into earnings, which could have set up a sell the news reaction.
The Yield on the 10-year Treasury continues to be stubbornly buoyant but the longer term chart shows some potential resistance. Anything hawkish from the Fed on Friday could see this shred right through resistance, but maybe the resistance is trying to tell us that the Fed is ready to be more accommodative and more dovish going forward.
The rally in the dollar yesterday pushed it back above that longer-term resistance line, and that may not be a good recipe for the stock market.
The action isn't great but yesterday's 12-point loss in the S&P 500 came on the heals of the two-day rally that took the S&P from its lows on Thursday of 4370, to yesterday's high of 4419 or over 1%, but as you will see in the S&P 500 down below, the 50-day EMA and other resistance is now an obstacle.
The S&P 500 (C-fund) made a higher high, and a higher low over Monday's action so there is a short-term rising trend, but the close near the lows of the day created a negative reversal day, and that's not usually a good way to start the next day. You can see that the chart is still decisively below the August descending resistance line and the 50-day EMA, so the bears have some advantage, while the bulls are hoping for some positive catalysts after the bell today from Nvidia, and on Friday from the Fed.
DWCPF (S-fund) bounced off its 200-day EMA last week but for a second straight day it stalled at the the old broken resistance line. Some churning back and forth in this area isn't the worst thing that could happen as long as it hangs around the 200-day EMA and doesn't create a bear flag in the process, which unfortunately is very possible given the sharpness of the decline this month that created a possible bearish flag pole.
EFA (I-fund) couldn't hold onto a strong open yesterday as the dollar rallied to a new high for the year. It's a broken trend on the EFA chart but it does have the 200-day EMA trying to hold it up for now.
BND (Bonds / F-fund) was up modestly in dead-cat bounce fashion, and still lingers below support and all of the major moving averages. The Fed may be able to help at the end of the week, and technically this needs some help/ Getting back above 70.75 is the first order of business.
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
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.
Like what you're seeing on TSP Talk? Why not Tell a Friend about us? We'd really appreciate it, and they may too.
Thanks!
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.
