Stocks were down on Tuesday with the Dow shedding 94-points. And other than the Transportation Index which was up 0.73%, most major indices were flat to down on the day. Trading volume remains on the low side as traders stepped lightly in front of today's big FOMC meeting. Bonds opened lower but battled back to close relatively flat. The dollar was up but remains below resistance.
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The 2-day FOMC meeting concludes today and will end with a policy statement around 2 PM ET, and a summary of economic projections afterward. No change in interest rates is expected, but any editing in the wording in the policy statement could move the markets.
Despite the inflation concerns and the face pace of economic growth, bond yields continue to slide, and this has been a mystery, not only to me, but to many market pundits who are calling for inflation. We saw a move higher on Monday and early Tuesday to attempt to get back over 1.5%, but the yield will now have to leap over some potential resistance in the 1.525% area. There is an open gap up near 1.555%.
The dollar has moved up in the last few trading days and on Friday it filled that open gap marked below. The 200-day EMA has been holding as resistance so we're at an important pivot point if the dollar plans to do anything other than roll back over as it has done for months.
I can almost hear the yawns when I talk about yields and the dollar but the movement in these can often be telling us what is going on under the surface, and the bond market can usually sniff out things well before the stock market. I just wish I knew what the falling yields meant. It doesn't sound that good for the economy.
The price of oil is certainly taking advantage of the weakness in the dollar, and of course the price of many things rise when the dollar falls. That includes stock prices. If stock prices go too high, consumers can just avoid buying stocks, but in the case of oil, food, housing, and other commodity prices, most consumers don't have he option of not buying those things, but they can cut down, so perhaps the bond market is justified in being concerned about the economy.
All eyes will be on the 2 PM ET policy statement so expect some fireworks in the market around that time today.
[TD="width: 725"] Admin note: The Last Look Report is now a premium service. Thanks to everyone who has subscribed!
The Last Look Report Info
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The S&P 500 (C-fund) made another new intraday high yesterday, but it slipped to close down slightly on the day. One rising support line broke down on the day, but there is still other support levels not far below. If the index remains in that blue rising channel, the action could remain boring, and that's good news for the bulls. But the Fed could change that with one unexpected comment today.
The DWCPF (S-fund) was down moderately on Tuesday after a hitting the overhead resistance and flipping over on Monday. As we've said before, triple tops are not usually as ominous in the short term as double tops, but clearly that 2260 area is resistance until it gets taken out.
The EFA (I-fund) continues to slide higher, and this is one of those examples of why you shouldn't bet against a dull market. This has quietly made higher highs for weeks now, even though the gains are quite small. For the bears in EFA, it's like the frog and the pot of water that is heating up very slowly.
The Dow Transportation Index has chopped up and down on top of that 50-day EMA for four straight days now. This is a bullish looking chart with a healthy pullback, but if that 50-day EMA is broken, the technical picture will change for the worse in a hurry.
For entertainment purposes I'm showing the dramatic moves we have witnessed in the price of lumber this year. One of the strongest bull markets we've seen in lumber ever, has turned into a nasty bear market. The same thing happened with bitcoin, so what's next?
BND (bonds / F-fund) was flat yesterday but having closed above its 200-day average for 6-straight days gives this recent rally some credibility. I would have assumed that it would roll back over when testing the average, but instead it ripped right through it. As I've said before, I'm not sure what this is telling us because it doesn't seem like the growing economy justifies this action. What are these bond traders seeing out there?
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.
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[TD="align: center"] Daily TSP Funds Return
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[TD="align: right"][/TD]
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[/TABLE]
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[TD]
[/TD]
[TD="width: 362, align: center"]
[/TR]
[/TABLE]
The 2-day FOMC meeting concludes today and will end with a policy statement around 2 PM ET, and a summary of economic projections afterward. No change in interest rates is expected, but any editing in the wording in the policy statement could move the markets.
Despite the inflation concerns and the face pace of economic growth, bond yields continue to slide, and this has been a mystery, not only to me, but to many market pundits who are calling for inflation. We saw a move higher on Monday and early Tuesday to attempt to get back over 1.5%, but the yield will now have to leap over some potential resistance in the 1.525% area. There is an open gap up near 1.555%.
The dollar has moved up in the last few trading days and on Friday it filled that open gap marked below. The 200-day EMA has been holding as resistance so we're at an important pivot point if the dollar plans to do anything other than roll back over as it has done for months.
I can almost hear the yawns when I talk about yields and the dollar but the movement in these can often be telling us what is going on under the surface, and the bond market can usually sniff out things well before the stock market. I just wish I knew what the falling yields meant. It doesn't sound that good for the economy.
The price of oil is certainly taking advantage of the weakness in the dollar, and of course the price of many things rise when the dollar falls. That includes stock prices. If stock prices go too high, consumers can just avoid buying stocks, but in the case of oil, food, housing, and other commodity prices, most consumers don't have he option of not buying those things, but they can cut down, so perhaps the bond market is justified in being concerned about the economy.
All eyes will be on the 2 PM ET policy statement so expect some fireworks in the market around that time today.
[TD="width: 725"] Admin note: The Last Look Report is now a premium service. Thanks to everyone who has subscribed!
The Last Look Report Info
[/TD]
The S&P 500 (C-fund) made another new intraday high yesterday, but it slipped to close down slightly on the day. One rising support line broke down on the day, but there is still other support levels not far below. If the index remains in that blue rising channel, the action could remain boring, and that's good news for the bulls. But the Fed could change that with one unexpected comment today.
The DWCPF (S-fund) was down moderately on Tuesday after a hitting the overhead resistance and flipping over on Monday. As we've said before, triple tops are not usually as ominous in the short term as double tops, but clearly that 2260 area is resistance until it gets taken out.
The EFA (I-fund) continues to slide higher, and this is one of those examples of why you shouldn't bet against a dull market. This has quietly made higher highs for weeks now, even though the gains are quite small. For the bears in EFA, it's like the frog and the pot of water that is heating up very slowly.
The Dow Transportation Index has chopped up and down on top of that 50-day EMA for four straight days now. This is a bullish looking chart with a healthy pullback, but if that 50-day EMA is broken, the technical picture will change for the worse in a hurry.
For entertainment purposes I'm showing the dramatic moves we have witnessed in the price of lumber this year. One of the strongest bull markets we've seen in lumber ever, has turned into a nasty bear market. The same thing happened with bitcoin, so what's next?
BND (bonds / F-fund) was flat yesterday but having closed above its 200-day average for 6-straight days gives this recent rally some credibility. I would have assumed that it would roll back over when testing the average, but instead it ripped right through it. As I've said before, I'm not sure what this is telling us because it doesn't seem like the growing economy justifies this action. What are these bond traders seeing out there?
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.
