Stocks were up on Wednesday but the rally may be running out of steam, and there's nothing wrong with that after the giant move higher this month. The Dow led with a gain of 164-points, or +0.43%, and the small caps (S-fund) kept the party going with another 0.33% rally. Yields and the dollar were up weighing slightly on the stock market and pushing the I-fund to a small loss.
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The debate going on now between the bulls and the bears is whether the economy going to have a soft landing - meaning no recession but rather a modest slowdown in growth, or an outright recession with multiple quarters of negative growth. The answer to that should determine where stocks might be a year from now, and right now, this month anyway, the bulls and the soft landing are winning the argument.
Goldman Sachs recently came out with their forecast for 2024 and they are looking for the S&P 500 to gain about 5% between now and the end of 2024. That's more than 13 months away, so 5% isn't very impressive, especially now that the G-fund is paying nearly 5%, and that may not be changing anytime soon.
Yesterday we saw a decent bounce back in yields and the dollar, although neither gained back the big losses from Tuesday, although it was enough to push the F-fund down moderately. Retail sales came in stronger than expected and at this point any signs of strength in the economy might get investors a little nervous, especially when it pushes yields higher.
I mentioned this yesterday, but it is the short-term potential for stocks that may be concerning as we tend to see a consolidation after a big move like we saw on Tuesday. However, moves like that are generally good news for the longer term. This is what happened last year after a CPI triggered rally.
... and this is what happened this year after meaningful large rallies, whether a day or two in duration, or a big move at the top of an existing rally, like we saw this week. It's not a market killer, but generally we see some kind of a pause, or even a short-term peak, afterward.
We got some mixed retail data yesterday with Target rallying big on earnings, while the overall retail sales numbers were down 0.1% compared to last month, but better than expected, as I mentioned above. Wal-Mart reports today.
Both Cisco and Palo Alto were trading down near 10% after reporting earnings yesterday after the bell. Not giants in the Magnificent 7 category, but big enough companies to perhaps impact the Nasdaq today. I drew in what I was seeing in after hours trading should the losses roll into today.
Oil was down 2% yesterday, pushing it back down toward the recent lows. This a possible sign of trouble in the economy and again, that is the debate going on - will an interest triggered slowdown turn into a recession or just a soft landing?
We'll get the weekly jobless claims data this morning and while these are not usually market movers, the data better be in line with the slowdown theme after the recent explosion in stock prices on the weak CPI data, otherwise a snap back rally in Treasury Yields could trigger some give backs in the stock market.
The S&P 500 (C-fund) was up slightly but is is due for some slowing action, if not some backing and filling as the November rally has opened more holes than a street in Manhattan. There's some resistance near 4545, but the Nasdaq chart actually hit its late July peak this week, so perhaps this will try to catch up and reach up toward 4600 again. Goldman Sachs' target for the end of next year is 4700, so if they're accurate, that's only 150 more points left on the bone. We just had a 400 point rally off the lows.
DWCPF (S-fund) was up again but it closed well off the high to create a possible negative reversal formation. That wouldn't be the worst thing to happen with the Swiss Cheese look to the recent rally.
EFA (I-fund) was down fractionally with the dollar rallying 0.38%, and the formation looks similar to the small caps chart above.
BND (bonds / F-fund) pulled back sharply and is attempting to fill in Tuesday's open gap already. It opened another gap in the process, and there's another one near 69. These almost always get filled eventually on the bond chart, which is why I am obsessed with them.
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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The debate going on now between the bulls and the bears is whether the economy going to have a soft landing - meaning no recession but rather a modest slowdown in growth, or an outright recession with multiple quarters of negative growth. The answer to that should determine where stocks might be a year from now, and right now, this month anyway, the bulls and the soft landing are winning the argument.
Goldman Sachs recently came out with their forecast for 2024 and they are looking for the S&P 500 to gain about 5% between now and the end of 2024. That's more than 13 months away, so 5% isn't very impressive, especially now that the G-fund is paying nearly 5%, and that may not be changing anytime soon.
Yesterday we saw a decent bounce back in yields and the dollar, although neither gained back the big losses from Tuesday, although it was enough to push the F-fund down moderately. Retail sales came in stronger than expected and at this point any signs of strength in the economy might get investors a little nervous, especially when it pushes yields higher.
I mentioned this yesterday, but it is the short-term potential for stocks that may be concerning as we tend to see a consolidation after a big move like we saw on Tuesday. However, moves like that are generally good news for the longer term. This is what happened last year after a CPI triggered rally.
... and this is what happened this year after meaningful large rallies, whether a day or two in duration, or a big move at the top of an existing rally, like we saw this week. It's not a market killer, but generally we see some kind of a pause, or even a short-term peak, afterward.
We got some mixed retail data yesterday with Target rallying big on earnings, while the overall retail sales numbers were down 0.1% compared to last month, but better than expected, as I mentioned above. Wal-Mart reports today.
Both Cisco and Palo Alto were trading down near 10% after reporting earnings yesterday after the bell. Not giants in the Magnificent 7 category, but big enough companies to perhaps impact the Nasdaq today. I drew in what I was seeing in after hours trading should the losses roll into today.
Oil was down 2% yesterday, pushing it back down toward the recent lows. This a possible sign of trouble in the economy and again, that is the debate going on - will an interest triggered slowdown turn into a recession or just a soft landing?
We'll get the weekly jobless claims data this morning and while these are not usually market movers, the data better be in line with the slowdown theme after the recent explosion in stock prices on the weak CPI data, otherwise a snap back rally in Treasury Yields could trigger some give backs in the stock market.
The S&P 500 (C-fund) was up slightly but is is due for some slowing action, if not some backing and filling as the November rally has opened more holes than a street in Manhattan. There's some resistance near 4545, but the Nasdaq chart actually hit its late July peak this week, so perhaps this will try to catch up and reach up toward 4600 again. Goldman Sachs' target for the end of next year is 4700, so if they're accurate, that's only 150 more points left on the bone. We just had a 400 point rally off the lows.
DWCPF (S-fund) was up again but it closed well off the high to create a possible negative reversal formation. That wouldn't be the worst thing to happen with the Swiss Cheese look to the recent rally.
EFA (I-fund) was down fractionally with the dollar rallying 0.38%, and the formation looks similar to the small caps chart above.
BND (bonds / F-fund) pulled back sharply and is attempting to fill in Tuesday's open gap already. It opened another gap in the process, and there's another one near 69. These almost always get filled eventually on the bond chart, which is why I am obsessed with them.
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.
