Stocks were flat to lower on Tuesday despite a sharp sell off in early trading. With Microsoft earnings on deck after the bell yesterday, and several other major tech companies scheduled to release earnings over the next week, plus the FOMC meeting also next week, the market treaded water during the day. The Dow had a triple digit gain but the broader indices were flat to lower on the day. Bond yields and the dollar opened higher triggering the selling in early trading yesterday, but they both reversed helping stocks come off their lows.
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After the bell, the initial reaction to Microsoft was positive as it traded up over 4% in after hours trading however, as of this writing the earnings conference call was still underway and things could change. If those gains do hold into today's open, it could set a positive tone for today's trading as a sigh of relief as analysts have been anticipating the worst for earnings. The futures did open lower on Tuesday evening however, so perhaps that won't be the case. Stocks have been rallying into earnings season so the chances of a "sell the news" reaction is also very real.
The dollar opened higher yesterday, hit that wall near 27.60 again and flipped back over like a well trained dog. It then proceeded to travel down to the lower end of the recent two-week range where it settled. So, no breakout or break down yet, but that can't go on much longer.
Take a look at how the S&P 500 has reacted to this action in the dollar. You may ask why I talk about the dollar so often in this daily commentary, but it is such a big catalyst right now, along with bond yields, that you can't talk about one without referencing the action of the others.
And speaking of yields, the 10-year Treasury Yield also started the day on the upside, then rolled over again as the right shoulder of this head and shoulders pattern continues to form. In a perfect world the head and shoulder pattern would breakdown, as they are supposed to do, and if that happens it would help the F-fund continue its 2023 rally since bond prices move counter to yields.
At this point, with so much information being thrown at us over the next week including Apple, Amazon, Alphabet (GOOG) earnings, plus the FOMC meeting and anticipated 0.25% rate hike, we can only guess how the market will react. The charts are trying to tell a bullish story, but it will be a matter of whether or not those charts can breakout above some meaningful resistance, which could make or break this January rally. The gains holding this month would be key for the market this year, if you believe in the January Barometer.
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The S&P 500 (C-fund) closed above its 200-day EMA for a second straight day. There are a lot of good developments here but it's too soon, and maybe too close to resistance, to get overly excited yet. But as you see in the smaller longer-term chart within the daily chart, the descending resistance has been broken. Holding for 3 to 5 days would be more convincing.
The DWCPF (S-fund) remains in an inverted head and shoulders pattern, which are generally bullish as they tend to break to the upside, but that doesn't mean that left shoulder can't develop more, as the right shoulder did, before it does break out, if indeed it eventually does.
The EFA / I-fund was down modestly coming off the lows after the dollar flipped from positive to negative yesterday. This has been in a tight ascending channel for a couple of weeks making it tough for those interested in buying the I-fund, from being able to buy a decent dip.
BND (bonds / F-fund) had a nice day as it reversed up from the morning lows to move back above the 200-day EMA creating a positive outside reversal day. This looks good but if I had any reservations it would be that I would want to see it to get above the top of the gap that it filled yesterday.
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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After the bell, the initial reaction to Microsoft was positive as it traded up over 4% in after hours trading however, as of this writing the earnings conference call was still underway and things could change. If those gains do hold into today's open, it could set a positive tone for today's trading as a sigh of relief as analysts have been anticipating the worst for earnings. The futures did open lower on Tuesday evening however, so perhaps that won't be the case. Stocks have been rallying into earnings season so the chances of a "sell the news" reaction is also very real.
The dollar opened higher yesterday, hit that wall near 27.60 again and flipped back over like a well trained dog. It then proceeded to travel down to the lower end of the recent two-week range where it settled. So, no breakout or break down yet, but that can't go on much longer.
Take a look at how the S&P 500 has reacted to this action in the dollar. You may ask why I talk about the dollar so often in this daily commentary, but it is such a big catalyst right now, along with bond yields, that you can't talk about one without referencing the action of the others.
And speaking of yields, the 10-year Treasury Yield also started the day on the upside, then rolled over again as the right shoulder of this head and shoulders pattern continues to form. In a perfect world the head and shoulder pattern would breakdown, as they are supposed to do, and if that happens it would help the F-fund continue its 2023 rally since bond prices move counter to yields.
At this point, with so much information being thrown at us over the next week including Apple, Amazon, Alphabet (GOOG) earnings, plus the FOMC meeting and anticipated 0.25% rate hike, we can only guess how the market will react. The charts are trying to tell a bullish story, but it will be a matter of whether or not those charts can breakout above some meaningful resistance, which could make or break this January rally. The gains holding this month would be key for the market this year, if you believe in the January Barometer.
Admin Note: Attention bop.gov folks! It looks like most of our email alerts going to @bop.gov email addresses are not getting delivered. If you or someone you know has some influence over there, maybe you can help stop them from filtering out our emails from @tsptalk and get these delivered to your inboxes. That would be much appreciated! There's probably other agencies as well, but this one stuck out to me in our recent delivery reports. Thanks.
The S&P 500 (C-fund) closed above its 200-day EMA for a second straight day. There are a lot of good developments here but it's too soon, and maybe too close to resistance, to get overly excited yet. But as you see in the smaller longer-term chart within the daily chart, the descending resistance has been broken. Holding for 3 to 5 days would be more convincing.
The DWCPF (S-fund) remains in an inverted head and shoulders pattern, which are generally bullish as they tend to break to the upside, but that doesn't mean that left shoulder can't develop more, as the right shoulder did, before it does break out, if indeed it eventually does.
The EFA / I-fund was down modestly coming off the lows after the dollar flipped from positive to negative yesterday. This has been in a tight ascending channel for a couple of weeks making it tough for those interested in buying the I-fund, from being able to buy a decent dip.
BND (bonds / F-fund) had a nice day as it reversed up from the morning lows to move back above the 200-day EMA creating a positive outside reversal day. This looks good but if I had any reservations it would be that I would want to see it to get above the top of the gap that it filled yesterday.
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.
