The Dow was down modestly yesterday, and small caps were flat, but the S&P 500 and Nasdaq added onto Monday's rally yesterday with decent gains. There are a lot of catalysts this week, as there always seems to be, so a 2 day bounce after a pullback could easily get tested today. Bonds were up as we saw new lows in the 10-year Treasury Yield.
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By the time you read this the presidential debate will have come and gone and since it hasn't started as I write this, I have no commentary except to hope we get some clarity on policies and perhaps a hint about who may be taking the lead. The stock market isn't completely concerned about who wins. What it wants is gridlock in DC, meaning a split between the White House and congress so that the financial system doesn't get hit with a lot of changes.
We'll get the CPI report this morning before the opening bell and estimates are looking for a 0.2% increase in the CPI and Core CPI. On an annual basis, that is expected to be increases of 2.6% and 3.2% respectively. As we've discussed before, the recent trend has clearly been lower but inflation is still at the top of a 15 year range , and the Fed is still adamant about getting this down near 2% again.
Because of that, the Fed may be reluctant to go 0.50% on next week's interest rate cut, and if they do go 0.50%, watch out. It means they see something in the economy or the labor market that they don't like.
The 10-year Treasury Yield is getting aggressively low and this is suggesting weakness in the economy and the Fed is falling behind, and that is concerning because they are way behind, but like I said, a 0.50% cut could really scare the stock market.
Yesterday we saw some big losses in large bank stocks with JPMorgan Chase down 5% after saying expectations were too optimistic. That nearly erased Monday's gains but so far the good news is the prior peaks are still holding as support, and as long as that holds, it's a strong looking chart. If it falls below 43.50 then we could have a problem that bleeds into the rest of the market.
The price of oil tumbled again, down another 3.5% to 66.61. That's the good news bad news headline because it's good for us when we fill up our gas tanks and save some extra cash, but it could be the oil market telling us that the economy is struggling.
We'll get the PPI report on Thursday.
The S&P 500 (C-fund) retraced about half of Monday's gains before reversing midday and closing at the highs, and back above the 50-day EMA. There's a little more work to do here before we can rule out a bear flag forming, but it actually looks pretty good as long as 5400 can hold and it needs to get back above 5525 quickly. There is that open gap all the way down near 5350 that could look to get filled on any alarming headline from the CPI.
The DWCPF (S-fund) is also bouncing at an important level. It's not out of the woods yet with yesterday unable to follow through on Monday's gains, but like the S&P 500 above, it had a positive reversal day. It seems to be revisiting all the old filled gaps.
The EFA (I-fund) took a hit yesterday although it did close well off the lows. The dollar is bouncing again and that always causes some headwinds for the I-fund.
BND (F-fund) made another new intraday and closing high yesterday as the trend remains firmly on the upside, but it is still at the top of a channel and that means there's room to pull back.
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.
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By the time you read this the presidential debate will have come and gone and since it hasn't started as I write this, I have no commentary except to hope we get some clarity on policies and perhaps a hint about who may be taking the lead. The stock market isn't completely concerned about who wins. What it wants is gridlock in DC, meaning a split between the White House and congress so that the financial system doesn't get hit with a lot of changes.
We'll get the CPI report this morning before the opening bell and estimates are looking for a 0.2% increase in the CPI and Core CPI. On an annual basis, that is expected to be increases of 2.6% and 3.2% respectively. As we've discussed before, the recent trend has clearly been lower but inflation is still at the top of a 15 year range , and the Fed is still adamant about getting this down near 2% again.
Because of that, the Fed may be reluctant to go 0.50% on next week's interest rate cut, and if they do go 0.50%, watch out. It means they see something in the economy or the labor market that they don't like.
The 10-year Treasury Yield is getting aggressively low and this is suggesting weakness in the economy and the Fed is falling behind, and that is concerning because they are way behind, but like I said, a 0.50% cut could really scare the stock market.
Yesterday we saw some big losses in large bank stocks with JPMorgan Chase down 5% after saying expectations were too optimistic. That nearly erased Monday's gains but so far the good news is the prior peaks are still holding as support, and as long as that holds, it's a strong looking chart. If it falls below 43.50 then we could have a problem that bleeds into the rest of the market.
The price of oil tumbled again, down another 3.5% to 66.61. That's the good news bad news headline because it's good for us when we fill up our gas tanks and save some extra cash, but it could be the oil market telling us that the economy is struggling.
We'll get the PPI report on Thursday.
The S&P 500 (C-fund) retraced about half of Monday's gains before reversing midday and closing at the highs, and back above the 50-day EMA. There's a little more work to do here before we can rule out a bear flag forming, but it actually looks pretty good as long as 5400 can hold and it needs to get back above 5525 quickly. There is that open gap all the way down near 5350 that could look to get filled on any alarming headline from the CPI.
The DWCPF (S-fund) is also bouncing at an important level. It's not out of the woods yet with yesterday unable to follow through on Monday's gains, but like the S&P 500 above, it had a positive reversal day. It seems to be revisiting all the old filled gaps.
The EFA (I-fund) took a hit yesterday although it did close well off the lows. The dollar is bouncing again and that always causes some headwinds for the I-fund.
BND (F-fund) made another new intraday and closing high yesterday as the trend remains firmly on the upside, but it is still at the top of a channel and that means there's room to pull back.
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.
