Stocks pulled back during post Fed rate hike, and pre-Apple earnings, trading. The indices closed off their lows but the losses were a bit heavy. Smalls caps lagged again as the weakness in regional banking sector continues. Bonds and the F-fund were down after the big 2-day rally. As we get past some of the major earnings releases and the Fed meeting, the market will be looking for the next catalyst and all eyes will be on this morning's jobs report.
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Apple posted earnings after the bell yesterday and beat estimates on the top and bottom line, but they were just released and it may take a little while to digest the data and assess any guidance they may provide for future quarters, although in the past they have been very reluctant to release that kind of information. The initial after hours reaction had Apple's stock up between 1 and 2%, but nothing market moving yet. Investors may be waiting for the conference call to get more info, but that hadn't started yet as of this writing.
But again, the behemoth tech stocks seem to be doing just fine, and meanwhile less than 25% of stocks on the Nasdaq are currently above their 200-day EMAs. And, those small regional banks were falling off a cliff yesterday - down another 5.5% on the day. That had the small cap (S-fund) lagging on the day again.
We are seeing some very interesting action in the bond market as they try to figure out if yields will fall based on weaker economic conditions, or rally based o the Fed's hawkish outlook on inflation. You probably know that bond prices and the F-fund move counter to the action of yields, in this case the 10-year Treasury Yield. One, the yield (TNX), has created a full inverted head and shoulders pattern while bond prices (BND) have created an upright head and shoulders pattern. They both filled an open gap while testing the middle of the head again, something head and shoulders (and inverted head and shoulders) pattern do on occasion.
If these patterns play out, I would expect yields to go higher and the F-fund to go lower in the short-term. Why is that important? Higher yields have been triggering selling in the stock market. However, as I have whined about before, the bond market seems to always try to get me to lean the wrong way as chart patterns on bond charts don't always do what I expect them to do. We'll see.
A reminder that seasonality starts to weaken starting today, the 5th,, although it's more choppy than outright negative over the next few weeks.
Chart provided courtesy of www.sentimentrader.com
We get the April Jobs Report this morning. Estimates are looking for a gain of between 180,000 and 200,000 jobs. The unemployment rate is expected to come in at 3.6% after the prior month's 3.5%.
The S&P 500 (C-fund) is back down testing its 50-day EMA again, and this time it closed just below it. Is this the time for it to fill that open gap? The 3970 - 3975 look like a great place for the bulls to do some buying, but it almost looks too obvious so it may not get there - or it will tank right through it. The market doesn't usually give us a lot of time to buy good opportunities.
DWCPF (S-fund) continues to lag as the regional bank stocks made new lows again on Thursday. Whether these are buying opportunities or a lead up to a major breakdown, we don't know. That's why buying dips isn't easy. A break below the double bottom could push this down below 1500 if the bear flag technical analysis works.
The EFA (I-fund) looks good as long as it remains above 72.50. Any close below that level and we have to consider this trying to fill in at least some of those open gaps below. The question is whether it can remain above 72.50 despite the lure of those gaps?
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 so much for reading. Have a great weekend!
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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Apple posted earnings after the bell yesterday and beat estimates on the top and bottom line, but they were just released and it may take a little while to digest the data and assess any guidance they may provide for future quarters, although in the past they have been very reluctant to release that kind of information. The initial after hours reaction had Apple's stock up between 1 and 2%, but nothing market moving yet. Investors may be waiting for the conference call to get more info, but that hadn't started yet as of this writing.
But again, the behemoth tech stocks seem to be doing just fine, and meanwhile less than 25% of stocks on the Nasdaq are currently above their 200-day EMAs. And, those small regional banks were falling off a cliff yesterday - down another 5.5% on the day. That had the small cap (S-fund) lagging on the day again.
We are seeing some very interesting action in the bond market as they try to figure out if yields will fall based on weaker economic conditions, or rally based o the Fed's hawkish outlook on inflation. You probably know that bond prices and the F-fund move counter to the action of yields, in this case the 10-year Treasury Yield. One, the yield (TNX), has created a full inverted head and shoulders pattern while bond prices (BND) have created an upright head and shoulders pattern. They both filled an open gap while testing the middle of the head again, something head and shoulders (and inverted head and shoulders) pattern do on occasion.
If these patterns play out, I would expect yields to go higher and the F-fund to go lower in the short-term. Why is that important? Higher yields have been triggering selling in the stock market. However, as I have whined about before, the bond market seems to always try to get me to lean the wrong way as chart patterns on bond charts don't always do what I expect them to do. We'll see.
A reminder that seasonality starts to weaken starting today, the 5th,, although it's more choppy than outright negative over the next few weeks.
Chart provided courtesy of www.sentimentrader.com
We get the April Jobs Report this morning. Estimates are looking for a gain of between 180,000 and 200,000 jobs. The unemployment rate is expected to come in at 3.6% after the prior month's 3.5%.
The S&P 500 (C-fund) is back down testing its 50-day EMA again, and this time it closed just below it. Is this the time for it to fill that open gap? The 3970 - 3975 look like a great place for the bulls to do some buying, but it almost looks too obvious so it may not get there - or it will tank right through it. The market doesn't usually give us a lot of time to buy good opportunities.
DWCPF (S-fund) continues to lag as the regional bank stocks made new lows again on Thursday. Whether these are buying opportunities or a lead up to a major breakdown, we don't know. That's why buying dips isn't easy. A break below the double bottom could push this down below 1500 if the bear flag technical analysis works.
The EFA (I-fund) looks good as long as it remains above 72.50. Any close below that level and we have to consider this trying to fill in at least some of those open gaps below. The question is whether it can remain above 72.50 despite the lure of those gaps?
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 so much for reading. Have a great weekend!
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.
