Stocks rallied and most of the excitement may have been over the recent decline in yields or perhaps optimism over earnings which are coming out heavily now. A third of the S&P 500 will report this week and yesterday we got a mixed bag, as we will overreact to below. The Dow gained 205-points and most indices tagged along for the oversold bounce, although the Transportation Index did not participate as airline stocks were down sharply.
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After the bell there was quite a mishmash of earnings with the big two reports, Microsoft and Alphabet (Google), moving in opposite directions. Because Microsoft is a Dow component it will benefit, but the S&P 500 and Nasdaq may battle over which of those two outweighs the other. Microsoft does have the larger market cap, but Google was down (-6.2%) more than Microsoft was up (+3.9%) as of this writing in the after hours trading.
Both charts had been acting well and Microsoft is indicating that it may break above the bull flag it had been forming, it also would bounce off the support at its 50-day EMA, and it is now above the September high - if the after hours gains hold into today.
Google on the other hand, was looking very good technically but the after hours indications are that it may fall below its 50-day EMA and one of the major long term support lines, as it was trading near 131.
I don't want to get into Individual stocks, so this is just trying to gauge where the major indices may go after the Magnificent Seven companies report. There were several other smaller companies reporting and they were mixed although mostly decent, but Facebook (Meta) reports after the closing bell today, and Amazon reports on Thursday, and they are the next possible market movers.
The 10-year Treasury Yield was slightly lower on the day, while the dollar was up sharply, so the size of the rally in stock yesterday was surprising given the recent weakness and the recent inability for the indices to hold gains into the close.
The dollar looks like it is getting primed to break to the the upside, which is interesting considering the economic concerns, but the perhaps the US greenback is doing better than some of the overseas currencies so it is just relatively stronger. Whatever the reason, if it does break out above that resistance, the stock market, and particularly the I-fund, may feel some pressure.
The strong dollar doesn't do any favors to the price of oil either, which was down another 2% yesterday and that pushed it below its 50-day EMA and the lower end of the bear flag, although the flag could have extended down near 84, in which case it is barely hanging on.
Who cares, and don't we want oil to go down? Well, yes, because we want to avoid seeing scary prices at the gasoline pumps, but it could also be the one of the indications that a recession is coming if the decline is because of a bet on lower demand.
The market indices are not out of trouble, but the question is how much of a bounce does this relief rally have left? Will we get a fourth quarter rally? Will October turn positive? It's getting close as the loss in the S&P 500 is less than 1% with a week to go in the month, although the S and I-funds have a lot more ground to make up before they turn positive.
We will get the 3rd quarter GDP numbers on Thursday, and then on Friday we'll get another PCE Prices Report.
The S&P 500 (C-fund) was up yesterday and we can throw that into the, "stocks don't go down everyday, even in bear markets" category. Meaning, this one day rally looks good, but it was bound to happen after the tremendous decline from 4400 over the last week or so. Whether it's going to become the start of a 4th quarter rally or just another dead cat bounce like we saw earlier this month, remains to be seen. We've had some good and bad indications over the last few days, but we do have a change in seasonality coming, for the better, and maybe the bears will step aside for a while?
DWCPF (S-fund, small caps) led on the upside but the chart has barely budged off the recent lows. There was a lot of support near the lows and that's an encouraging sign that we could get a decent relief rally, but a test the lows after a major decline is also very possible before any real move upward is sustained. There's room to run, but the jury's still out.
EFA (I-fund) was up despite a major rally in the dollar, which tells me that the international market may be stronger than we are seeing. But if the dollar continues to move higher, then that strength may never manifest in the I-fund. There is an open path up to the top of the channel, but the 50-day EMA is now below the 200-day EMA and any rebound may be considered temporary relief and nothing more. If it can get above 69 or 70, then the bulls may have something to talk about.
BND (bonds / F-fund) rebounded nicely after another dip in the longer term yields yesterday. Like the other charts, the rally looks fine, but it's just a technical oversold boost for now, and until it can prove that it can take out overhead resistance.
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.
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 there was quite a mishmash of earnings with the big two reports, Microsoft and Alphabet (Google), moving in opposite directions. Because Microsoft is a Dow component it will benefit, but the S&P 500 and Nasdaq may battle over which of those two outweighs the other. Microsoft does have the larger market cap, but Google was down (-6.2%) more than Microsoft was up (+3.9%) as of this writing in the after hours trading.
Both charts had been acting well and Microsoft is indicating that it may break above the bull flag it had been forming, it also would bounce off the support at its 50-day EMA, and it is now above the September high - if the after hours gains hold into today.
Google on the other hand, was looking very good technically but the after hours indications are that it may fall below its 50-day EMA and one of the major long term support lines, as it was trading near 131.
I don't want to get into Individual stocks, so this is just trying to gauge where the major indices may go after the Magnificent Seven companies report. There were several other smaller companies reporting and they were mixed although mostly decent, but Facebook (Meta) reports after the closing bell today, and Amazon reports on Thursday, and they are the next possible market movers.
The 10-year Treasury Yield was slightly lower on the day, while the dollar was up sharply, so the size of the rally in stock yesterday was surprising given the recent weakness and the recent inability for the indices to hold gains into the close.
The dollar looks like it is getting primed to break to the the upside, which is interesting considering the economic concerns, but the perhaps the US greenback is doing better than some of the overseas currencies so it is just relatively stronger. Whatever the reason, if it does break out above that resistance, the stock market, and particularly the I-fund, may feel some pressure.
The strong dollar doesn't do any favors to the price of oil either, which was down another 2% yesterday and that pushed it below its 50-day EMA and the lower end of the bear flag, although the flag could have extended down near 84, in which case it is barely hanging on.
Who cares, and don't we want oil to go down? Well, yes, because we want to avoid seeing scary prices at the gasoline pumps, but it could also be the one of the indications that a recession is coming if the decline is because of a bet on lower demand.
The market indices are not out of trouble, but the question is how much of a bounce does this relief rally have left? Will we get a fourth quarter rally? Will October turn positive? It's getting close as the loss in the S&P 500 is less than 1% with a week to go in the month, although the S and I-funds have a lot more ground to make up before they turn positive.
We will get the 3rd quarter GDP numbers on Thursday, and then on Friday we'll get another PCE Prices Report.
The S&P 500 (C-fund) was up yesterday and we can throw that into the, "stocks don't go down everyday, even in bear markets" category. Meaning, this one day rally looks good, but it was bound to happen after the tremendous decline from 4400 over the last week or so. Whether it's going to become the start of a 4th quarter rally or just another dead cat bounce like we saw earlier this month, remains to be seen. We've had some good and bad indications over the last few days, but we do have a change in seasonality coming, for the better, and maybe the bears will step aside for a while?
DWCPF (S-fund, small caps) led on the upside but the chart has barely budged off the recent lows. There was a lot of support near the lows and that's an encouraging sign that we could get a decent relief rally, but a test the lows after a major decline is also very possible before any real move upward is sustained. There's room to run, but the jury's still out.
EFA (I-fund) was up despite a major rally in the dollar, which tells me that the international market may be stronger than we are seeing. But if the dollar continues to move higher, then that strength may never manifest in the I-fund. There is an open path up to the top of the channel, but the 50-day EMA is now below the 200-day EMA and any rebound may be considered temporary relief and nothing more. If it can get above 69 or 70, then the bulls may have something to talk about.
BND (bonds / F-fund) rebounded nicely after another dip in the longer term yields yesterday. Like the other charts, the rally looks fine, but it's just a technical oversold boost for now, and until it can prove that it can take out overhead resistance.
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.
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.
