The consecutive positive Mondays streak is over at 15, and that's good in the sense that maybe we won't have to talk about it anymore, but bad because stocks closed well off their highs to close negative - at least for the S&P 500. It was a wild day in that the S&P 500 was up 31-points at its highs, and down 35 at its lows, so closing down 7 was -- I don't know -- interesting maybe? The Nasdaq did hold onto gains so it was a mixed day, but small caps were down sharply. The Dow was down and much of the loss was due to the the decline in Intel's stock.
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I didn't even mention yields and it was perhaps the news highlight of the day. The 10-year Treasury Yield futures were again over 5% in the early trading session. The stock market opens one hour after the bond market, which is why the offset in the charts below. Stocks gapped open lower and the S&P 500 hit the lows within minutes to the tune of -35 points. But as soon as yields started to pull back again, stocks started to bounce back. As I mentioned above, the S&P 500 was up 31-points at the peak. Once the yield stabilized, the buying dried up in stocks market, although the weakness in the final hour had a lot to do with Intel.
The purported reason for the reversal in yields was that activist investor Bill Ackman commented that bond prices are getting too low to short (or yields too high.) Bond prices move counter to bond yields.
Intel was delivered a blow when Nvidia announced that they were going to become a rival to one of their technologies. Intel is not the market mover it once was but it is part of the Dow, the S&P 500, and the Nasdaq, so its decline in the last hour had some rippling effects in those indices. Otherwise it was shaping up to be a decent reversal for stocks.
The dollar was also down sharply yesterday, and that makes the weakness in stocks yesterday interesting, because as you'll see below, oil was also down so the recent three catalysts all fell in line with the stock market, but Intel's news created a sell first, ask questions later reaction in the final hour of trading.
The weakness in the dollar, and the late selling in US stocks helped the I-fund (EFA) to hold onto a gain, albeit a small one.
Here is that chart of crude oil which was down sharply. That is an ugly looking bear flag that is now challenging the support from the 50-day EMA. There's more support at 84 but a breakdown here would be interesting if the dollar and the 10-year are also peaking, which may or may not be the case.
The stock market would typically see that as a positive in this current environment, but it could also be a sign of a weakening economy. The question is, will stocks prefer yields falling if it means economic growth issues? Looking out a ways, the market seems to be between a rock and a hard place, but in the short term it is again getting oversold and may be due for another quick relief rally.
Microsoft and Google report earnings today after the closing bell. Facebook (Meta) reports on Wednesday, and Amazon on Thursday. Many of these large cap tech stocks have very nice looking charts. Too bad it hasn't been contagious as they continue to have to do the heavy lifting to get stocks to rally. So, these earnings must be good or it could be a final straw for the bull market.
We will also get the 3rd quarter GDP numbers on Thursday, and then on Friday we'll get another PCE Prices Report. Busy week.
The S&P 500 (C-fund) broke down early on Monday, battled back and moved deep into positive territory before flipping back over late and closing somewhere in the middle of the high and low of the day. It barely closed above the previous lows, and yesterday's candlestick formation is considered a spinning top and shows some indecision from investors. It often leads to a reversal, but not if the headlines continue to put the pressure on.
DWCPF (S-fund, small caps) lagged again and this time it tagged the bottom of that old open gap from all the way back in May and also the bottom of the blue trading channel. Both are potential support, but the action has been undoubtedly poor. If this doesn't hold, support gets very flimsy.
BND (bonds / F-fund) finally got a big rally, perhaps on Bill Ackman's comments, perhaps on the 5% in the 10-year yield being a peak. This chart is not out of danger so right now I'm just looking at the overhead gap getting filled. After that, there's more work to be done and it's tough to call for the end of this downtrend, even though it's getting fairly overdone.
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
Daily Market Commentary Archives
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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I didn't even mention yields and it was perhaps the news highlight of the day. The 10-year Treasury Yield futures were again over 5% in the early trading session. The stock market opens one hour after the bond market, which is why the offset in the charts below. Stocks gapped open lower and the S&P 500 hit the lows within minutes to the tune of -35 points. But as soon as yields started to pull back again, stocks started to bounce back. As I mentioned above, the S&P 500 was up 31-points at the peak. Once the yield stabilized, the buying dried up in stocks market, although the weakness in the final hour had a lot to do with Intel.
The purported reason for the reversal in yields was that activist investor Bill Ackman commented that bond prices are getting too low to short (or yields too high.) Bond prices move counter to bond yields.
Intel was delivered a blow when Nvidia announced that they were going to become a rival to one of their technologies. Intel is not the market mover it once was but it is part of the Dow, the S&P 500, and the Nasdaq, so its decline in the last hour had some rippling effects in those indices. Otherwise it was shaping up to be a decent reversal for stocks.
The dollar was also down sharply yesterday, and that makes the weakness in stocks yesterday interesting, because as you'll see below, oil was also down so the recent three catalysts all fell in line with the stock market, but Intel's news created a sell first, ask questions later reaction in the final hour of trading.
The weakness in the dollar, and the late selling in US stocks helped the I-fund (EFA) to hold onto a gain, albeit a small one.
Here is that chart of crude oil which was down sharply. That is an ugly looking bear flag that is now challenging the support from the 50-day EMA. There's more support at 84 but a breakdown here would be interesting if the dollar and the 10-year are also peaking, which may or may not be the case.
The stock market would typically see that as a positive in this current environment, but it could also be a sign of a weakening economy. The question is, will stocks prefer yields falling if it means economic growth issues? Looking out a ways, the market seems to be between a rock and a hard place, but in the short term it is again getting oversold and may be due for another quick relief rally.
Microsoft and Google report earnings today after the closing bell. Facebook (Meta) reports on Wednesday, and Amazon on Thursday. Many of these large cap tech stocks have very nice looking charts. Too bad it hasn't been contagious as they continue to have to do the heavy lifting to get stocks to rally. So, these earnings must be good or it could be a final straw for the bull market.
We will also get the 3rd quarter GDP numbers on Thursday, and then on Friday we'll get another PCE Prices Report. Busy week.
The S&P 500 (C-fund) broke down early on Monday, battled back and moved deep into positive territory before flipping back over late and closing somewhere in the middle of the high and low of the day. It barely closed above the previous lows, and yesterday's candlestick formation is considered a spinning top and shows some indecision from investors. It often leads to a reversal, but not if the headlines continue to put the pressure on.
DWCPF (S-fund, small caps) lagged again and this time it tagged the bottom of that old open gap from all the way back in May and also the bottom of the blue trading channel. Both are potential support, but the action has been undoubtedly poor. If this doesn't hold, support gets very flimsy.
BND (bonds / F-fund) finally got a big rally, perhaps on Bill Ackman's comments, perhaps on the 5% in the 10-year yield being a peak. This chart is not out of danger so right now I'm just looking at the overhead gap getting filled. After that, there's more work to be done and it's tough to call for the end of this downtrend, even though it's getting fairly overdone.
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
Daily Market Commentary Archives
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.
