The Dow gained 200-points yesterday, the S&P 500 and particularly the Nasdaq were down on the day, and small caps were up (Russell 2000) so investors continue to be selective in their stock picking, shying away from big tech and moving more toward the beaten down stock sectors of 2024. Bonds were up as yields slipped but the big news yesterday was the selling of Microsoft after hours.
[TABLE="align: center"]
[TR]
[TD="align: center"]
[/TD]
[TD]
[/TD]
[TD="width: 311, align: center"] Daily TSP Funds Return
[TABLE="align: center"]
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The first of four Mag 7 companies reporting this week came out after the bell yesterday, and while Microsoft beat estimates, the revenue from their Azure cloud services was disappointing and the stock was selling off about 6% in after hours trading. Being the #2 weighted stock in the S&P 500, the C-fund may have some trouble today, barring a save from the Federal Reserve who will release their policy statement later today.
We have seen Nvidia, who had taken over the #1 weighted spot on the S&P 500 a few weeks ago, is down about 26% from its peak moving it back to #4, so this market is seeing the leaders fall apart, but are they out of the game with them being the leaders of AI? They were getting nose-bleed high back when they were rocking and rolling, and you know investors were wishing they would come down so they could buy at more reasonable prices. Well, they are getting better but you never know how much of a drawdown they may see. It's always easy to say you want to see a pullback to buy, but once it happens, fear creeps in.
Speaking of Nvidia (which, full disclosure, I do own) it was up 3% after hours on the heals of AMD, another chip company, which reported earnings after the bell and was up over 7%, so a bit of a mix and that may help ease some of the pain that Microsoft may be dishing out today.
META reports after the bell today and will it be a repeat or will one of these Mag 7 stocks finally beat estimates and give the C-fund a break?
All of this is helping the S-fund catch up as the rotation continues. With the S&P (C-fund) losing 0.50% yesterday and probably starting today even lower, the the small caps of DWCPF (S-fund) were up a few ticks yesterday, and it continues to widen its lead for July as the S-fund holds onto a 5% plus gain, while the C-fund turned negative for the month yesterday.
The Fed could obviously change all that today, especially if they hint at all that the September interest rate cut is in any kind of jeopardy. The market has priced in a 100% chance of a cut by the September meeting so the any surprise would be on the downside. Being an election year, I would doubt there will be any negative surprises thrown at the market.
The Dow Transportation Index was up nicely yesterday after some key earnings in the sector, but it closed well off its highs as it once again backed off from the previous highs. If this breaks out it would be a pretty good green light for stocks, but another failure up here would be a problem.
So, it's META after the bell today, then Apple and Amazon will report tomorrow after hours. That means today is the last day to make a precious July IFT if you want to be in, or out, of the market when these next three Mag 7 companies report, and it has to be done before noon ET otherwise it becomes an August IFT.
The S&P 500 (C-fund) broke below the 50-day EMA yesterday, but battled back to close just above it. That's a good sign, but what Microsoft may do to it today may write a different story. The open gaps above are being eerily ignored. I had been expecting some kind of snap back rally to fill at least the first one, even if it is a trap, but so far there hasn't been a catalyst. We sure have a lot of catalysts on the table this week to try to make that happen, otherwise the bears could take complete control.
The EFA (I-fund) had a good day on Tuesday as it played a little catch up after Monday's losses. There is still major support at the 100-day EMA but stiff resistance is just overhead.
BND (bonds / F-fund) moved up again making a new intraday and closing high in this rising trading channel. Obviously the Fed could change everything, or ignite another leg higher.
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.
[TABLE="align: center"]
[TR]
[TD="align: center"]
[TD]
[/TD]
[TD="width: 311, align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The first of four Mag 7 companies reporting this week came out after the bell yesterday, and while Microsoft beat estimates, the revenue from their Azure cloud services was disappointing and the stock was selling off about 6% in after hours trading. Being the #2 weighted stock in the S&P 500, the C-fund may have some trouble today, barring a save from the Federal Reserve who will release their policy statement later today.
We have seen Nvidia, who had taken over the #1 weighted spot on the S&P 500 a few weeks ago, is down about 26% from its peak moving it back to #4, so this market is seeing the leaders fall apart, but are they out of the game with them being the leaders of AI? They were getting nose-bleed high back when they were rocking and rolling, and you know investors were wishing they would come down so they could buy at more reasonable prices. Well, they are getting better but you never know how much of a drawdown they may see. It's always easy to say you want to see a pullback to buy, but once it happens, fear creeps in.
Speaking of Nvidia (which, full disclosure, I do own) it was up 3% after hours on the heals of AMD, another chip company, which reported earnings after the bell and was up over 7%, so a bit of a mix and that may help ease some of the pain that Microsoft may be dishing out today.
META reports after the bell today and will it be a repeat or will one of these Mag 7 stocks finally beat estimates and give the C-fund a break?
All of this is helping the S-fund catch up as the rotation continues. With the S&P (C-fund) losing 0.50% yesterday and probably starting today even lower, the the small caps of DWCPF (S-fund) were up a few ticks yesterday, and it continues to widen its lead for July as the S-fund holds onto a 5% plus gain, while the C-fund turned negative for the month yesterday.
The Fed could obviously change all that today, especially if they hint at all that the September interest rate cut is in any kind of jeopardy. The market has priced in a 100% chance of a cut by the September meeting so the any surprise would be on the downside. Being an election year, I would doubt there will be any negative surprises thrown at the market.
The Dow Transportation Index was up nicely yesterday after some key earnings in the sector, but it closed well off its highs as it once again backed off from the previous highs. If this breaks out it would be a pretty good green light for stocks, but another failure up here would be a problem.
So, it's META after the bell today, then Apple and Amazon will report tomorrow after hours. That means today is the last day to make a precious July IFT if you want to be in, or out, of the market when these next three Mag 7 companies report, and it has to be done before noon ET otherwise it becomes an August IFT.
The S&P 500 (C-fund) broke below the 50-day EMA yesterday, but battled back to close just above it. That's a good sign, but what Microsoft may do to it today may write a different story. The open gaps above are being eerily ignored. I had been expecting some kind of snap back rally to fill at least the first one, even if it is a trap, but so far there hasn't been a catalyst. We sure have a lot of catalysts on the table this week to try to make that happen, otherwise the bears could take complete control.
The EFA (I-fund) had a good day on Tuesday as it played a little catch up after Monday's losses. There is still major support at the 100-day EMA but stiff resistance is just overhead.
BND (bonds / F-fund) moved up again making a new intraday and closing high in this rising trading channel. Obviously the Fed could change everything, or ignite another leg higher.
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.
