Investors seem unafraid of the big week that is about to unfold with earnings and the Fed's decision on interest rates coming up. The Dow made it 11 straight days of gains adding another 184-points yesterday, and the S&P 500 and Nasdaq tagged along. Small caps and the I-fund did not participate in the rally with the S-fund flat on the day, and the I-fund down after yet another rally in the dollar, but the dollar is now up against resistance.
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It's a busy week and anything could happen, but the bond market saw yields rally, pushing bond prices lower, and the head and shoulders pattern here might suggest that a breakdown in yields could be coming. However, while H&S patterns tend to be bearish, that's not always the case as it can also be considered a continuation pattern and that means it may actually be bullish in an uptrend.
The strength in the dollar has been tough on the I-fund in recent days but now, after filling a couple of large open gaps, UUP has run up to the 50-day EMA and the old support line, which may act as resistance. Of course what the Fed says on Wednesday afternoon could make this chart look meaningless, but if it is telling a story, the tendency would be to see this move lower if resistance holds. A breakout above 28.10 could be trouble for stocks.
Let's take a look at the three major market movers that report this week - Microsoft, Google, and Meta.
All three have fallen recently but so far they look like harmless pullbacks. Microsoft and Google both broke out of flag-like formations and have experienced tests of the breakout area and major moving averages and have held so far. If they continue to hold after earnings it would produce very bullish looking charts. Failure to hold would obviously be a different story.
Meta (Facebook) has also pulled back but it has fallen through a couple of areas of support already and could be looking to test the 50-day EMA next, if earnings don't turn this around after the bell on Wednesday. So, it's a possible warning, or maybe just an adjustment of the angle of incline.
Keep in mind that for the year, Microsoft is already up 44%, Google is up 38%, and Meta a mere 142%, so their earnings may have to shine to keep their parties going.
Before Google and Meta report on Wednesday we get the Fed's decision on interest rates. There is still a 99% probability of a 0.25% rate hike baked into the market so investors will be more focused on what they have to say about their future meetings.
Apple and Amazon both report on Thursday of next week, August 3rd. They are both up around 50% for the year.
Oil has had quite a run in the last month as it is flirting with $80 a barrel. We should see gasoline prices creeping up again, if you haven't already. That's always a hindrance for consumer spending.
The S&P 500 (C-fund) had a good day, besting the broader market averages with its 0.40% gain. Its been moving sideways for a couple of days since the pullback off the recent highs. An open gap and an old broken resistance line near 4450 look like potential pullback targets if the tech earnings or the Fed shake things up.
DWCPF (S-fund) was flat yesterday after the two-day pullback to end last week. It looks like it may be trying to rollover, but support near 1840 is not far below. Seeing some buying after a 2-3 day pullback in a bull market would be typical, but this isn't going to be a typical week.
The EFA (I-fund) was down with pressure again coming from the rising dollar. We have a possible failed breakout developing but those open gaps look so enticing that the bears may be salivating. However, the dollar may be up against resistance, and that could be the deciding factor.
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.
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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It's a busy week and anything could happen, but the bond market saw yields rally, pushing bond prices lower, and the head and shoulders pattern here might suggest that a breakdown in yields could be coming. However, while H&S patterns tend to be bearish, that's not always the case as it can also be considered a continuation pattern and that means it may actually be bullish in an uptrend.
The strength in the dollar has been tough on the I-fund in recent days but now, after filling a couple of large open gaps, UUP has run up to the 50-day EMA and the old support line, which may act as resistance. Of course what the Fed says on Wednesday afternoon could make this chart look meaningless, but if it is telling a story, the tendency would be to see this move lower if resistance holds. A breakout above 28.10 could be trouble for stocks.
Let's take a look at the three major market movers that report this week - Microsoft, Google, and Meta.
All three have fallen recently but so far they look like harmless pullbacks. Microsoft and Google both broke out of flag-like formations and have experienced tests of the breakout area and major moving averages and have held so far. If they continue to hold after earnings it would produce very bullish looking charts. Failure to hold would obviously be a different story.
Meta (Facebook) has also pulled back but it has fallen through a couple of areas of support already and could be looking to test the 50-day EMA next, if earnings don't turn this around after the bell on Wednesday. So, it's a possible warning, or maybe just an adjustment of the angle of incline.
Keep in mind that for the year, Microsoft is already up 44%, Google is up 38%, and Meta a mere 142%, so their earnings may have to shine to keep their parties going.
Before Google and Meta report on Wednesday we get the Fed's decision on interest rates. There is still a 99% probability of a 0.25% rate hike baked into the market so investors will be more focused on what they have to say about their future meetings.
Apple and Amazon both report on Thursday of next week, August 3rd. They are both up around 50% for the year.
Oil has had quite a run in the last month as it is flirting with $80 a barrel. We should see gasoline prices creeping up again, if you haven't already. That's always a hindrance for consumer spending.
The S&P 500 (C-fund) had a good day, besting the broader market averages with its 0.40% gain. Its been moving sideways for a couple of days since the pullback off the recent highs. An open gap and an old broken resistance line near 4450 look like potential pullback targets if the tech earnings or the Fed shake things up.
DWCPF (S-fund) was flat yesterday after the two-day pullback to end last week. It looks like it may be trying to rollover, but support near 1840 is not far below. Seeing some buying after a 2-3 day pullback in a bull market would be typical, but this isn't going to be a typical week.
The EFA (I-fund) was down with pressure again coming from the rising dollar. We have a possible failed breakout developing but those open gaps look so enticing that the bears may be salivating. However, the dollar may be up against resistance, and that could be the deciding factor.
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.
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.
