Stocks were mixed on Tuesday with the Dow giving up a triple digit loss, and the Nasdaq adding triple digit gain, and the broader market was more negative than positive despite the modest gain in the S&P 500. Bond yields rallied then reversed lower helping small caps and the F-fund to recover some early losses. Alphabet reported decent earnings after hours, but there was a mixed bag of reports from other companies. The late action was negative again.
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The market breadth was convincingly negative with about 1500 more stocks down than up on the day. It was the large-cap tech stocks that received most of the positive attention, as small-cap stocks—reflected by the Russell 2000 - were down. However, the S-fund, which includes a mix of midcaps and small caps, managed to close with a slight gain.
Alphabet (GOOG) was up over 5% after hours as of this report on Tuesday evening. AMD and Chipotle were down sharply, but of course the Mag 7 stock Google is going to have more influence on the indices - or at least the large cap indices. This is what an inverted head and shoulders pattern is supposed to do...
Surprisingly, the QQQ Nasdaq 100 ETF, was only up 0.2% after hours after this news.
Microsoft and Meta report after the bell today, and then Apple and Amazon report on Thursday so the market is bracing for some possible volatility.
We also get the PCE Prices inflation report tomorrow before the opening bell, and then the October jobs report comes out on Friday morning. That will be the final jobs report before the election and expectations are looking for a gain of about 125,000 jobs in October, or about half of last month's tally, and the unemployment rate estimates are 4.1% to 4.2%.
The market is holding up and with the indices near or at all-time highs, the wall of worry is being climbed.
The election will have its impact and while large corporations have their their preferred candidates in the race, they are prepared for whomever will win. It's just a matter of which sectors might benefit the most from the policy differences of the two administrations. For example, bitcoin has been rallying sharply since Trump started to lead in the polls, and it could easily fall if the race goes the other way. It's the same for many industries like healthcare, housing, energy, etc. Some policies help certain sectors, and others hurt them.
So while that volatility is inevitable, the one thing many are concerned about is the aftermath of the election and whether we have a clear winner called in a reasonable amount of time. But again, Wall Street is probably less concerned than we think.
One thing they are concerned about is the rapid rise in Treasury Yields. Yesterday was a potential reversal day as the 10-year Treasury Yield moved well above 4.3% in early trading, but it fell back down to close the day below it. Is that the double top we talked about yesterday, with that failed breakout?
The PCE Prices and the jobs reports later this week will surely shake this up.
Seasonality favors the bulls for the next week, but there's so many catalysts on the docket in the next 7 days that it's difficult to speculate. Again, stocks are climbing that wall of worry, and with the recent pullback, that worrying got a little more elevated -- but is that good or bad for stocks?
The SPY (S&P 500 / C-fund) was up modestly despite the negative breadth. The Equal Weighted S&P 500 Index (same 500 stocks) was actually down 0.30% on the day. This continues to ride along the rising support of the 20-day EMA, and while it does have a small bearish flag look to it, we saw a similar sideways grind break to the upside earlier this month. Consolidating or losing steam? That is the question.
The DWCPF (S-fund) also has a little bear flag developing, but the support is holding up well at the moment. 2150 could be a pullback test area, but for now the 2180 - 2190 area should also try to hold it up on any dip.
The I-fund: The EFA tracking ETF was down 0.36% yesterday and the "ex USA ex China ex Hong Kong Index" was down 0.28%. My guess is the I-fund price, once posted, will be closer to 0.33%. You can see the TSP's eventual final daily price and return posted on our site each evening.
By the way, my guess for Tuesday's I-fund price was off by quite a bit. I had guessed +0.70% and it was actually +0.48%. At some point the TSP has to get more predictable or I might start getting suspicious.
The chart is struggling to get back into the wedge formation and above the 100-day EMA. The bears have an opportunity, but yesterday's negative reversal day in the dollar may help the bulls push this higher.
BND (Bonds / F-fund) had a positive reversal day and it did so right where the chart might suggest it could find support - after filling that open gap. Yields have to stop going up, but maybe there is short-term oversold play in the F-fund coming up.
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.
Daily TSP Funds Return
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The market breadth was convincingly negative with about 1500 more stocks down than up on the day. It was the large-cap tech stocks that received most of the positive attention, as small-cap stocks—reflected by the Russell 2000 - were down. However, the S-fund, which includes a mix of midcaps and small caps, managed to close with a slight gain.
Alphabet (GOOG) was up over 5% after hours as of this report on Tuesday evening. AMD and Chipotle were down sharply, but of course the Mag 7 stock Google is going to have more influence on the indices - or at least the large cap indices. This is what an inverted head and shoulders pattern is supposed to do...
Surprisingly, the QQQ Nasdaq 100 ETF, was only up 0.2% after hours after this news.
Microsoft and Meta report after the bell today, and then Apple and Amazon report on Thursday so the market is bracing for some possible volatility.
We also get the PCE Prices inflation report tomorrow before the opening bell, and then the October jobs report comes out on Friday morning. That will be the final jobs report before the election and expectations are looking for a gain of about 125,000 jobs in October, or about half of last month's tally, and the unemployment rate estimates are 4.1% to 4.2%.
The market is holding up and with the indices near or at all-time highs, the wall of worry is being climbed.
The election will have its impact and while large corporations have their their preferred candidates in the race, they are prepared for whomever will win. It's just a matter of which sectors might benefit the most from the policy differences of the two administrations. For example, bitcoin has been rallying sharply since Trump started to lead in the polls, and it could easily fall if the race goes the other way. It's the same for many industries like healthcare, housing, energy, etc. Some policies help certain sectors, and others hurt them.
So while that volatility is inevitable, the one thing many are concerned about is the aftermath of the election and whether we have a clear winner called in a reasonable amount of time. But again, Wall Street is probably less concerned than we think.
One thing they are concerned about is the rapid rise in Treasury Yields. Yesterday was a potential reversal day as the 10-year Treasury Yield moved well above 4.3% in early trading, but it fell back down to close the day below it. Is that the double top we talked about yesterday, with that failed breakout?
The PCE Prices and the jobs reports later this week will surely shake this up.
Seasonality favors the bulls for the next week, but there's so many catalysts on the docket in the next 7 days that it's difficult to speculate. Again, stocks are climbing that wall of worry, and with the recent pullback, that worrying got a little more elevated -- but is that good or bad for stocks?
The SPY (S&P 500 / C-fund) was up modestly despite the negative breadth. The Equal Weighted S&P 500 Index (same 500 stocks) was actually down 0.30% on the day. This continues to ride along the rising support of the 20-day EMA, and while it does have a small bearish flag look to it, we saw a similar sideways grind break to the upside earlier this month. Consolidating or losing steam? That is the question.
The DWCPF (S-fund) also has a little bear flag developing, but the support is holding up well at the moment. 2150 could be a pullback test area, but for now the 2180 - 2190 area should also try to hold it up on any dip.
The I-fund: The EFA tracking ETF was down 0.36% yesterday and the "ex USA ex China ex Hong Kong Index" was down 0.28%. My guess is the I-fund price, once posted, will be closer to 0.33%. You can see the TSP's eventual final daily price and return posted on our site each evening.
By the way, my guess for Tuesday's I-fund price was off by quite a bit. I had guessed +0.70% and it was actually +0.48%. At some point the TSP has to get more predictable or I might start getting suspicious.
The chart is struggling to get back into the wedge formation and above the 100-day EMA. The bears have an opportunity, but yesterday's negative reversal day in the dollar may help the bulls push this higher.
BND (Bonds / F-fund) had a positive reversal day and it did so right where the chart might suggest it could find support - after filling that open gap. Yields have to stop going up, but maybe there is short-term oversold play in the F-fund coming up.
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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