Stocks opened lower on Tuesday, rallied, faded, came back, and by the close it was a mixed bag but mostly positive outside of tech. The Dow gained 240-points, with a lot of that having to do with a rally in Wal-Mart. Bonds were down slightly, the dollar was flat, and oil was down. After the bell President Biden signed the Inflation Reduction Act which impacts corporate taxes, among other things, but that's just old news getting finalized.
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Wal-Mart helped the Dow as it makes up about 3% of the index, which is not the largest holding in the Dow, but somewhere in the middle of the 30 stocks and a 5% gain in any one stock could help the Dow outperform on any day. From the little I heard about Wal-Mart's earnings, they merely reiterated their second half outlook - an outlook that sent the stock sharply lower in May, so basically the outlook did not get worse so the stock rallied - question mark? My how times have changed. Now stocks are rallying because things are not getting worse.
When I view charts I have my basic moving averages that I use, but when an average comes into play that I don't follow as closely, I don't usually catch it right away. Some moving averages work better on some charts, and may not work well on others. It doesn't matter, You just have to find the one that seems to be working on a chart at any given time.
I bring this up because I did not notice that yesterday high's and reversal came right after the S&P 500 hit the 200-day simple moving average. I don't know if that will continue to hold, but I wish I checked that after the 200-day EMA (exponential) was taken out last week. The exponential moving average weighs the data that is closer to the present more heavily, where the simple average just takes that last 200 closing prices and divides that by 200. The SMA held in April after it fell below it earlier that month, and this was the first test of that average since.
Checking the bond market, the yield on the 10-year Treasury has remained stubbornly above the neckline of that head and shoulder pattern, and in the area of that old gap (green) which is near the 50-day EMA. It seems like it wants to break down since it looks like a possible bear flag, which is bearish, as is the head and shoulders pattern. Who cares? Well...
... it is keeping that 2 year / 10 year yield curve inverted, and as we all know by now, that generally means a recession is in the works. Maybe not today or next month, but some time between now and maybe the middle of next year. And I don't think the market has priced that in yet. "Maybe it's different this time?" Maybe, but history suggests that won't be the case.
Today we will get the release of the minutes from the recent FOMC meeting.
Like what you're seeing on TSP Talk? Why not tell a friend or co-worker about us? We'd really appreciate it, and they may too. Thanks!
The S&P 500 (C-fund) was up modestly and again it hit that 200-day SMA and stalled, at least for a day. There is still an open gap below 4150 but unless that 200-SMA holds, the melt up seems to be continuing and this kind of momentum always seems to move further than most expect. We spent so many months seeing rallies fail that when you get one of these, it takes a lot of people by surprise, and that is usually enough ammunition (lack of participation) to keep the rally going. Now let's see what it does with that 200 SMA.
The DWCPF (S-fund) is still dealing with the 200-day EMA, as opposed to the SMA, which it may test down the road, but for now, all eyes are on that blue line - and that high from early May which has been holding for 4 straight days now, but no signs of backing off yet.
The EFA (I-fund) is above the resistance of that channel but below those 200-day averages. There is an open gap down by 65 and change, and we know gaps like to get filled so that's a potential short-term target.
BND (Bonds / F-fund) continues to build on the bullish looking flag above the 50-day EMA. It looks good unless and until that lower support breaks. Why would bonds go up? That would happen if yields went down, and they would go down on weakening economic data.
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
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Thanks for reading. I appreciate it. 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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Wal-Mart helped the Dow as it makes up about 3% of the index, which is not the largest holding in the Dow, but somewhere in the middle of the 30 stocks and a 5% gain in any one stock could help the Dow outperform on any day. From the little I heard about Wal-Mart's earnings, they merely reiterated their second half outlook - an outlook that sent the stock sharply lower in May, so basically the outlook did not get worse so the stock rallied - question mark? My how times have changed. Now stocks are rallying because things are not getting worse.
When I view charts I have my basic moving averages that I use, but when an average comes into play that I don't follow as closely, I don't usually catch it right away. Some moving averages work better on some charts, and may not work well on others. It doesn't matter, You just have to find the one that seems to be working on a chart at any given time.
I bring this up because I did not notice that yesterday high's and reversal came right after the S&P 500 hit the 200-day simple moving average. I don't know if that will continue to hold, but I wish I checked that after the 200-day EMA (exponential) was taken out last week. The exponential moving average weighs the data that is closer to the present more heavily, where the simple average just takes that last 200 closing prices and divides that by 200. The SMA held in April after it fell below it earlier that month, and this was the first test of that average since.
Checking the bond market, the yield on the 10-year Treasury has remained stubbornly above the neckline of that head and shoulder pattern, and in the area of that old gap (green) which is near the 50-day EMA. It seems like it wants to break down since it looks like a possible bear flag, which is bearish, as is the head and shoulders pattern. Who cares? Well...
... it is keeping that 2 year / 10 year yield curve inverted, and as we all know by now, that generally means a recession is in the works. Maybe not today or next month, but some time between now and maybe the middle of next year. And I don't think the market has priced that in yet. "Maybe it's different this time?" Maybe, but history suggests that won't be the case.
Today we will get the release of the minutes from the recent FOMC meeting.
Like what you're seeing on TSP Talk? Why not tell a friend or co-worker about us? We'd really appreciate it, and they may too. Thanks!
The S&P 500 (C-fund) was up modestly and again it hit that 200-day SMA and stalled, at least for a day. There is still an open gap below 4150 but unless that 200-SMA holds, the melt up seems to be continuing and this kind of momentum always seems to move further than most expect. We spent so many months seeing rallies fail that when you get one of these, it takes a lot of people by surprise, and that is usually enough ammunition (lack of participation) to keep the rally going. Now let's see what it does with that 200 SMA.
The DWCPF (S-fund) is still dealing with the 200-day EMA, as opposed to the SMA, which it may test down the road, but for now, all eyes are on that blue line - and that high from early May which has been holding for 4 straight days now, but no signs of backing off yet.
The EFA (I-fund) is above the resistance of that channel but below those 200-day averages. There is an open gap down by 65 and change, and we know gaps like to get filled so that's a potential short-term target.
BND (Bonds / F-fund) continues to build on the bullish looking flag above the 50-day EMA. It looks good unless and until that lower support breaks. Why would bonds go up? That would happen if yields went down, and they would go down on weakening economic data.
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 for reading. I appreciate it. 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.
