Stocks spent most of the day in negative territory on Wednesday, but it was a fairly volatile day and by the close the S&P 500 closed just about in the middle of the day's range leaving investors with an inconclusive outcome, and after the bell earnings didn't really clear things up much. The action may have left the bears more bearish, and the bulls may feel more bullish as they both got a little of what they wanted.
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Some of Powell's thoughts from Wednesday: The economy has made significant progress toward the Fed's goals. The 2024 GDP looks to have risen above 2%. Inflation has moved much closer to their goal, although somewhat elevated.
The Fed sounded slightly more hawkish than many had hoped, but there wasn't much of a change to the probability of an interest rate cut looking out to the May 7th meeting, as the chances of a cut moved down just slightly.
Although the S&P 500 actually traded within the range of Tuesday's range (an "inside" day), it was still quite volatile in that it whipsawed back and forth quite a bit, closing down about a half of a percent, but right in the middle of the day's range.
Yields were also volatile, as we have come to expect on Fed meeting days. But in the end, the 10-year Treasury Yield ended the day right where it was before the Fed policy statement was announced, and barely changed on the day.
After the bell yesterday, the three Magnificent 7 stocks that reported, Microsoft, Tesla, and Meta, were quite volatile and all initially fell sharply after reporting, but they all seemed to stabilize, and either regained most of the losses, or moved into positive territory. Conference calls were still to come so I have no idea, as of this writing on Wednesday evening, what to expect at the opening bell, especially from the big tech Nasdaq 100 Index, but the futures were up modestly.
We have two more days of trading in what looks like it could be a positive month for stocks, although that could change with the market getting ready to digest the three Mag 7 earnings reports from last night, and Apple's report after the bell today, plus the PCE Prices inflation report on Friday.
February historically has some issues as only August and September have a worse record. But, if we look at the seasonality chart, we see that there are bullish and bearish periods within the month. The first three days look very good but this year there is no trading on February 1st or 2nd.
Chart provided courtesy of www.sentimentrader.com
Again, the PCE Prices and Personal Income and Spending reports come out on Friday before the opening bell, but with the Fed behind us, it may not have the same influence as it may have before their meeting.
The S&P 500 (C-fund) created an inside day, meaning the highs and lows yesterday were within the highs and lows of the prior day. It's an indecisive formation but it also tends to be a continuation pattern - but what is it continuing? We had a strong rally off the January 13th low, but then we had a pullback this week off the all time highs. Support is holding near 5950 and there is an open gap up near 6080 which could be resistance once filled, so that's the range I am watching for clues for which way this will break first.
DWCPF (S-fund) was down slightly yesterday and it remains below its open gap and below the double peak near 2400. This isn't the best set up if it can't quickly recapture 2400, but the 20 and 50-day EMAs are still holding as support.
ACWX (the I-fund tracking index) was down 0.06% yesterday and the I-fund was given a gain of 0.12%. That's five straight closes above the top of the broken channel, and it is also above the 20, 50, and 200-day averages, so technically this looks pretty solid. If the dollar cooperates, this could have some room to run higher.
BND (bonds / F-fund) was down slightly as the bond market remains fairly quiet since Monday's gap up. It is holding above its 50-day EMA, and the longer it can hold, the less of a threat that open gap down near 71.25 becomes.
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
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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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Some of Powell's thoughts from Wednesday: The economy has made significant progress toward the Fed's goals. The 2024 GDP looks to have risen above 2%. Inflation has moved much closer to their goal, although somewhat elevated.
The Fed sounded slightly more hawkish than many had hoped, but there wasn't much of a change to the probability of an interest rate cut looking out to the May 7th meeting, as the chances of a cut moved down just slightly.
Although the S&P 500 actually traded within the range of Tuesday's range (an "inside" day), it was still quite volatile in that it whipsawed back and forth quite a bit, closing down about a half of a percent, but right in the middle of the day's range.
Yields were also volatile, as we have come to expect on Fed meeting days. But in the end, the 10-year Treasury Yield ended the day right where it was before the Fed policy statement was announced, and barely changed on the day.
After the bell yesterday, the three Magnificent 7 stocks that reported, Microsoft, Tesla, and Meta, were quite volatile and all initially fell sharply after reporting, but they all seemed to stabilize, and either regained most of the losses, or moved into positive territory. Conference calls were still to come so I have no idea, as of this writing on Wednesday evening, what to expect at the opening bell, especially from the big tech Nasdaq 100 Index, but the futures were up modestly.
We have two more days of trading in what looks like it could be a positive month for stocks, although that could change with the market getting ready to digest the three Mag 7 earnings reports from last night, and Apple's report after the bell today, plus the PCE Prices inflation report on Friday.
February historically has some issues as only August and September have a worse record. But, if we look at the seasonality chart, we see that there are bullish and bearish periods within the month. The first three days look very good but this year there is no trading on February 1st or 2nd.
Chart provided courtesy of www.sentimentrader.com
Again, the PCE Prices and Personal Income and Spending reports come out on Friday before the opening bell, but with the Fed behind us, it may not have the same influence as it may have before their meeting.
The S&P 500 (C-fund) created an inside day, meaning the highs and lows yesterday were within the highs and lows of the prior day. It's an indecisive formation but it also tends to be a continuation pattern - but what is it continuing? We had a strong rally off the January 13th low, but then we had a pullback this week off the all time highs. Support is holding near 5950 and there is an open gap up near 6080 which could be resistance once filled, so that's the range I am watching for clues for which way this will break first.
DWCPF (S-fund) was down slightly yesterday and it remains below its open gap and below the double peak near 2400. This isn't the best set up if it can't quickly recapture 2400, but the 20 and 50-day EMAs are still holding as support.
ACWX (the I-fund tracking index) was down 0.06% yesterday and the I-fund was given a gain of 0.12%. That's five straight closes above the top of the broken channel, and it is also above the 20, 50, and 200-day averages, so technically this looks pretty solid. If the dollar cooperates, this could have some room to run higher.
BND (bonds / F-fund) was down slightly as the bond market remains fairly quiet since Monday's gap up. It is holding above its 50-day EMA, and the longer it can hold, the less of a threat that open gap down near 71.25 becomes.
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.php
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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