The new week starts off with some selling, and it was a little more severe than than the S&P500 and Nasdaq prices might indicate. Big tech companies again held up the large cap indices but the broader market indices took much bigger hits. Small caps and the I-fund lost over 1% each as yields and the dollar moved up sharply. Bonds and the F-fund were also weak on that move in yields.
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Yesterday we talked about the struggles the stock market has with seasonality this week, but if you look at the S&P 500 and Nasdaq, probably the two most meaningful indices in the US stock market, you would think that yesterday was mostly flat. But take a look at the advance / decline numbers on the NYSE and Nasdaq.
It was heavily weighted on the negative side, all except for the Nasdaq's Share breadth which was positive because big tech did well. 80% of the stocks in the NYSE and the S&P 500 were down on the day.
So internally the market was struggling but what pays in the TSP funds is the index as a whole and the S&P 500 (C-fund) only lost 0.18% because of those tech stocks. The S and I-funds didn't get that help and you see how they were treated.
The 10-year Treasury Yield is really pushing the limits of the chart's resistance and this is one of the major concerns for small caps as interest rates may not be coming down as quickly as we thought just a few weeks ago. But one of the reasons for this is that the economy is growing so there is a push me - pull me battle going on. The reaction in the stock market to a move above 4.2% in the 10-year will be interesting.
Here's the comparison between the Equal Weighted S&P 500 Index and the same 500 stocks of the S&P 500 itself, and you can see the difference those big techs made yesterday. One was down 0.85% and the other just 0.16%.
And above is the QQQ which contains those big tech stocks -- and it was positive on the day.
I mentioned keeping an eye on Nvidia and the Russell 2000 (IWM) as they both approached double tops, saying whether they broke out pulled back would determine market direction. Well, Nvidia broke out above the double top and so far the IWM has pulled back from its double top.
Earnings are coming in fast and furious this week, and while that's a big deal for the valuation of the stock market, it only seems to be the big tech stocks that have the ability to push the entire market around. So far earnings have generally been beating estimates, but that's almost always the case. It's whether they hit the "whisper numbers" that tends to determine which direction a stock goes after reporting.
Valuation is all well and good and should be all that matters, but emotion, trends, momentum, and day to day headlines also factor into the short-term direction of market and they actually produce some of the buying and selling opportunities when there are over reactions.
Admin Note: We will be working on a server and software upgrade this week that could disrupt the website periodically. The maintenance could take part or all of the website down at times hindering access, but it will not impact Premium Service email and text alerts. I'll keep you posted.
The S&P 500 (C-fund) was down slightly but just enough to push it back into the rising wedge formation. I don't know if this will eventually break to the upside, but for the last 5 days it has not been going anywhere. There's nothing wrong with a little consolidation, but the wedge pattern is a little worrisome.
DWCPF (S-fund) pulled back sharply and as we often talk about, when we see a breakout above long-term resistance, it often gets tested as support on any subsequent pullback. That support near 2180 looks firm, but if that breaks then the downside target gets a little more concerning.
The I-fund: The EFA tracking ETF was down 1.18% yesterday, ACWX was down 0.92%, and the "ex USA ex China ex Hong Kong Index" was down 0.60. The guessing game for the daily I-fund price may go on through the end of the year as the TSP transitions into the new tracking index, which is supposed to eventually mimic the "ex USA ex China ex Hong Kong Index." You can see the TSP's eventual final daily price and return posted on our site each evening.
BND (bonds / F-fund) broke below that 75-day average that has been trying to hold for a couple of weeks. Now the 100-day average is being tested. The weakness is a surprise given the Fed's negative trajectory of interest rates. Bond prices and the F-fund move counter to yields.
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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[TD="width: 311, align: center"] Daily TSP Funds Return
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Yesterday we talked about the struggles the stock market has with seasonality this week, but if you look at the S&P 500 and Nasdaq, probably the two most meaningful indices in the US stock market, you would think that yesterday was mostly flat. But take a look at the advance / decline numbers on the NYSE and Nasdaq.
It was heavily weighted on the negative side, all except for the Nasdaq's Share breadth which was positive because big tech did well. 80% of the stocks in the NYSE and the S&P 500 were down on the day.
So internally the market was struggling but what pays in the TSP funds is the index as a whole and the S&P 500 (C-fund) only lost 0.18% because of those tech stocks. The S and I-funds didn't get that help and you see how they were treated.
The 10-year Treasury Yield is really pushing the limits of the chart's resistance and this is one of the major concerns for small caps as interest rates may not be coming down as quickly as we thought just a few weeks ago. But one of the reasons for this is that the economy is growing so there is a push me - pull me battle going on. The reaction in the stock market to a move above 4.2% in the 10-year will be interesting.
Here's the comparison between the Equal Weighted S&P 500 Index and the same 500 stocks of the S&P 500 itself, and you can see the difference those big techs made yesterday. One was down 0.85% and the other just 0.16%.
And above is the QQQ which contains those big tech stocks -- and it was positive on the day.
I mentioned keeping an eye on Nvidia and the Russell 2000 (IWM) as they both approached double tops, saying whether they broke out pulled back would determine market direction. Well, Nvidia broke out above the double top and so far the IWM has pulled back from its double top.
Earnings are coming in fast and furious this week, and while that's a big deal for the valuation of the stock market, it only seems to be the big tech stocks that have the ability to push the entire market around. So far earnings have generally been beating estimates, but that's almost always the case. It's whether they hit the "whisper numbers" that tends to determine which direction a stock goes after reporting.
Valuation is all well and good and should be all that matters, but emotion, trends, momentum, and day to day headlines also factor into the short-term direction of market and they actually produce some of the buying and selling opportunities when there are over reactions.
Admin Note: We will be working on a server and software upgrade this week that could disrupt the website periodically. The maintenance could take part or all of the website down at times hindering access, but it will not impact Premium Service email and text alerts. I'll keep you posted.
The S&P 500 (C-fund) was down slightly but just enough to push it back into the rising wedge formation. I don't know if this will eventually break to the upside, but for the last 5 days it has not been going anywhere. There's nothing wrong with a little consolidation, but the wedge pattern is a little worrisome.
DWCPF (S-fund) pulled back sharply and as we often talk about, when we see a breakout above long-term resistance, it often gets tested as support on any subsequent pullback. That support near 2180 looks firm, but if that breaks then the downside target gets a little more concerning.
The I-fund: The EFA tracking ETF was down 1.18% yesterday, ACWX was down 0.92%, and the "ex USA ex China ex Hong Kong Index" was down 0.60. The guessing game for the daily I-fund price may go on through the end of the year as the TSP transitions into the new tracking index, which is supposed to eventually mimic the "ex USA ex China ex Hong Kong Index." You can see the TSP's eventual final daily price and return posted on our site each evening.
BND (bonds / F-fund) broke below that 75-day average that has been trying to hold for a couple of weeks. Now the 100-day average is being tested. The weakness is a surprise given the Fed's negative trajectory of interest rates. Bond prices and the F-fund move counter to yields.
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.
