Stocks reversed nicely after the sell off at the opening bell. The Dow was down over 700-points at the lows but closed down just 129-points. The S&P 500 snuck into positive territory near the close and the Nasdaq led with a big gain erasing the morning losses. A breakout to the upside in the dollar helped push oil down below $100 a barrel, and we continue to see commodity prices fall, which is certainly a break from the inflationary trend. The weaker economic data is also helping bonds push to a one month high.
[TABLE="align: center"]
[TR]
[TD="align: center"]
[/TD]
[TD]
[/TD]
[TD="width: 338, align: center"] Daily TSP Funds Return
[TABLE="align: center"]
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The I-fund took a big loss because of the 1.4% gain in the dollar, and the overseas market closing well before the U.S. markets closed.
The price of oil was a key headline yesterday as it fell below $100 for the first time in a couple of months, and that's a good news / bad news situation. Most of us want lower gasoline prices and the stock market celebrated that with a big comeback yesterday, but it is the recession fears that may be pushing prices lower as Wall Street is betting on a decrease in demand. The bear flag on this chart played out perfectly, but that brings up another potential problem for stocks, as the S&P 500 forms that same formation.
Yields were down as bond prices moved higher, but here we are again - another yield curve inversions between the 2 and 10-year bonds. We saw one in April which alerted us to the possibility of an upcoming recession, and after a brief reprieve, here's the 2-tyear yield paying more than the 10-year. That's not always a sign that stocks have to keep falling because stocks tend to fall into the inversions, which they have.
The rally in the dollar sent prices lower in not only oil, but commodities including gold, silver, copper, etc., lumber and the agricultures like corn and wheat which were down hard.
The Jobs report will come out on Friday and the estimates are looking for a gain of about 250,000 jobs and an unemployment rate of 3.6%. The market has been nearly ignoring these all important reports since inflation has been the bigger concern, but it is kind of unusual to see estimates this high, and an unemployment rate this low during a recession. This is one reason the Fed is still being aggressive with interest rates. They want to see a tighter labor market to help curb inflation.
The S&P 500 (C-fund) was just north of flat on Tuesday after a sharp sell off to start the day so it was a positive reversal day. That was bullish action but stepping back a bit, the recent sideways action off last week's low is making another small bear flag within the larger one. There is a small open gap down by 3700 and of course that large open gap up near 4000, and the chart is basically right in the middle of the large blue trading channel. We're in a bear market so we should expect an eventual bearish outcome, but we could also see short term rallies up to support just to keep us guessing. Until something changes, those rallies probably need to be sold.
The DWCPF (S-fund) is also making a smaller bear flag within its larger bear flag so the obstacles remain. A move back above the 20-day EMA (green) would be a positive change.
BND (Bonds / F-fund) was up again so it is holding onto the recent gains that pushed it above a couple of areas of resistance, including the 50-day EMA which it has been below all year. There are two open gaps below and the trend hasn't really changed so while I'm optimistic, I'm also a little skeptical.
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. 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.
[TABLE="align: center"]
[TR]
[TD="align: center"]
[TD]
[/TD]
[TD="width: 338, align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The I-fund took a big loss because of the 1.4% gain in the dollar, and the overseas market closing well before the U.S. markets closed.
The price of oil was a key headline yesterday as it fell below $100 for the first time in a couple of months, and that's a good news / bad news situation. Most of us want lower gasoline prices and the stock market celebrated that with a big comeback yesterday, but it is the recession fears that may be pushing prices lower as Wall Street is betting on a decrease in demand. The bear flag on this chart played out perfectly, but that brings up another potential problem for stocks, as the S&P 500 forms that same formation.
Yields were down as bond prices moved higher, but here we are again - another yield curve inversions between the 2 and 10-year bonds. We saw one in April which alerted us to the possibility of an upcoming recession, and after a brief reprieve, here's the 2-tyear yield paying more than the 10-year. That's not always a sign that stocks have to keep falling because stocks tend to fall into the inversions, which they have.
The rally in the dollar sent prices lower in not only oil, but commodities including gold, silver, copper, etc., lumber and the agricultures like corn and wheat which were down hard.
The Jobs report will come out on Friday and the estimates are looking for a gain of about 250,000 jobs and an unemployment rate of 3.6%. The market has been nearly ignoring these all important reports since inflation has been the bigger concern, but it is kind of unusual to see estimates this high, and an unemployment rate this low during a recession. This is one reason the Fed is still being aggressive with interest rates. They want to see a tighter labor market to help curb inflation.
The S&P 500 (C-fund) was just north of flat on Tuesday after a sharp sell off to start the day so it was a positive reversal day. That was bullish action but stepping back a bit, the recent sideways action off last week's low is making another small bear flag within the larger one. There is a small open gap down by 3700 and of course that large open gap up near 4000, and the chart is basically right in the middle of the large blue trading channel. We're in a bear market so we should expect an eventual bearish outcome, but we could also see short term rallies up to support just to keep us guessing. Until something changes, those rallies probably need to be sold.
The DWCPF (S-fund) is also making a smaller bear flag within its larger bear flag so the obstacles remain. A move back above the 20-day EMA (green) would be a positive change.
BND (Bonds / F-fund) was up again so it is holding onto the recent gains that pushed it above a couple of areas of resistance, including the 50-day EMA which it has been below all year. There are two open gaps below and the trend hasn't really changed so while I'm optimistic, I'm also a little skeptical.
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. 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.
