The late Moderna news on Tuesday sent the futures higher, and while it wasn't a blow out day across the board, stocks did hold onto a lot of those gains in Wednesday's trading session. As for small caps, it was a blowout day, but they had been lagging for some time and are playing a little catch up. The Dow gained a modest 228-points, which was actually about 200-points off the day's high so stocks did fade from the morning highs.
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Small caps are usually the group that leads the market out of a recession, and anytime we get some kind of news that the virus may be getting under control, whether it's case counts falling or vaccine news as we had yesterday, they tend to do well. But they are also the hardest hit when the news is negative or perhaps there's no news. So, yesterday's Moderna news was a good day for the economic outlook and the small caps.
The S&P 500 failed to breakout above Monday, and the June 8th highs, but it keeps knocking on the door. The bears had an opportunity to push the sell button again, like it did in Monday's negative reversal, and they did make a midday push lower yesterday, but the bulls fought back and the indices held onto much of those morning gains - but still remain below the recent highs.
Earnings season hasn't been bad so far, but it's very early. Next week there will be many more reports, and the names will start getting bigger and more influential to the market. Netflix comes out after the bell today, and could be somewhat of a market mover, being that the large tech names have been such a key part of this rebound off the March lows.
Yesterday the Nasdaq (+0.59%) and Nasdaq 100 (+0.11%) stocks actually lagged because of the Moderna news because the stay at home / work from home stocks like Zoom, Netflix, and Amazon were down on the day.
That may be how the summer goes. Positive virus news, small caps thrive. Negative virus news, the stay at home stocks lead.
I noticed after the market closed yesterday that these were the top three headlines on CNBC.com, the financial website.
Trump’s approval rating on the economy tanks in new poll
Trump is running out of time to craft an economic agenda for reelection as Biden gains ground
Biden maintains lead over Trump in 2020 swing states, new CNBC/Change Research poll says
Again, I'm not sure what the market actually wants to happen in the election, although I know it prefers gridlock in DC so that big changes aren't as easy to make. As I've said before, either the market thinks Trump is going to be fine, or it thinks Biden may not be a issue for the market if he wins, but we have seen that it is somewhat concerned about his potential V.P. and Treasury Secretary picks. Whatever it is, the market remains resilient, and I wouldn't let the political headlines cloud your investment judgment, but we may have to read between the lines sometimes to separate what is happening from what some people want to happen.
The S&P 500 (C-fund) tagged that recent high again but couldn't climb above it. It did actually make an intraday move above Monday's high but it couldn't close above the June 8 closing high. It's not a surprise to see some selling at those levels after what happened on Monday, but once we see a definitive break, or I should say "if" we see a definitive break, then we could see a swarm of buyers who have been sitting back and waiting for the breakout before buying. A gap was opened on Wednesday morning, but it was closed with the intraday dip.
The DWCPF (S-fund) had a big day after the 2% loss on Tuesday. It opened a gap and it remains open. It closed at 1475 and there's a couple of levels of resistance between 1480 and 1490.
The Dow Transportation Index busted loose with a near 3% gain and it is now substantially above the 200-day EMA.
The EFA (I-fund) rallied but closed off the highs as the dollar was down sharply early, but bounced back as the day went on. It made a higher high over the June 8 high, but closed below it. It also left an open gap in its wake.
The dollar found support at the June low and bounced back a bit but it was still down on the day. The bear flag breakdown (blue) suggests the downside could have more to go, but perhaps a short term bounce off the prior low to resistance could happen first.
The Yield on the 10-Year Treasury remains stubbornly low despite signs of the economic improvement, and that of course means the opposite for bond prices and the F-fund.
The BND (bond ETF) was flat but remains right near the recent highs and inside a rising trading channel.
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
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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[TD="align: center"] Daily TSP Funds Return
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[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[TD][/TD]
[TD="align: center"]
[/TR]
[/TABLE]
Small caps are usually the group that leads the market out of a recession, and anytime we get some kind of news that the virus may be getting under control, whether it's case counts falling or vaccine news as we had yesterday, they tend to do well. But they are also the hardest hit when the news is negative or perhaps there's no news. So, yesterday's Moderna news was a good day for the economic outlook and the small caps.
The S&P 500 failed to breakout above Monday, and the June 8th highs, but it keeps knocking on the door. The bears had an opportunity to push the sell button again, like it did in Monday's negative reversal, and they did make a midday push lower yesterday, but the bulls fought back and the indices held onto much of those morning gains - but still remain below the recent highs.
Earnings season hasn't been bad so far, but it's very early. Next week there will be many more reports, and the names will start getting bigger and more influential to the market. Netflix comes out after the bell today, and could be somewhat of a market mover, being that the large tech names have been such a key part of this rebound off the March lows.
Yesterday the Nasdaq (+0.59%) and Nasdaq 100 (+0.11%) stocks actually lagged because of the Moderna news because the stay at home / work from home stocks like Zoom, Netflix, and Amazon were down on the day.
That may be how the summer goes. Positive virus news, small caps thrive. Negative virus news, the stay at home stocks lead.
I noticed after the market closed yesterday that these were the top three headlines on CNBC.com, the financial website.
Trump’s approval rating on the economy tanks in new poll
Trump is running out of time to craft an economic agenda for reelection as Biden gains ground
Biden maintains lead over Trump in 2020 swing states, new CNBC/Change Research poll says
Again, I'm not sure what the market actually wants to happen in the election, although I know it prefers gridlock in DC so that big changes aren't as easy to make. As I've said before, either the market thinks Trump is going to be fine, or it thinks Biden may not be a issue for the market if he wins, but we have seen that it is somewhat concerned about his potential V.P. and Treasury Secretary picks. Whatever it is, the market remains resilient, and I wouldn't let the political headlines cloud your investment judgment, but we may have to read between the lines sometimes to separate what is happening from what some people want to happen.
The S&P 500 (C-fund) tagged that recent high again but couldn't climb above it. It did actually make an intraday move above Monday's high but it couldn't close above the June 8 closing high. It's not a surprise to see some selling at those levels after what happened on Monday, but once we see a definitive break, or I should say "if" we see a definitive break, then we could see a swarm of buyers who have been sitting back and waiting for the breakout before buying. A gap was opened on Wednesday morning, but it was closed with the intraday dip.
The DWCPF (S-fund) had a big day after the 2% loss on Tuesday. It opened a gap and it remains open. It closed at 1475 and there's a couple of levels of resistance between 1480 and 1490.
The Dow Transportation Index busted loose with a near 3% gain and it is now substantially above the 200-day EMA.
The EFA (I-fund) rallied but closed off the highs as the dollar was down sharply early, but bounced back as the day went on. It made a higher high over the June 8 high, but closed below it. It also left an open gap in its wake.
The dollar found support at the June low and bounced back a bit but it was still down on the day. The bear flag breakdown (blue) suggests the downside could have more to go, but perhaps a short term bounce off the prior low to resistance could happen first.
The Yield on the 10-Year Treasury remains stubbornly low despite signs of the economic improvement, and that of course means the opposite for bond prices and the F-fund.
The BND (bond ETF) was flat but remains right near the recent highs and inside a rising trading channel.
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
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.
