Stocks were mixed and choppy on Tuesday and that's 3 losses in the last 4 days for the S&P 500, but small caps managed another decent gain. The I-fund lagged with the dollar up again, and bonds were basically flat despite a dip in yields. The large caps are getting a little weak in the knees as we enter earrings season for the S&P 500 and Nasdaq leaders, and it wasn't a good start last night.
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If you ever want to see a long streak end, just mention it. Yesterday I mentioned that the S&P 500 (C-fund) had been up 11 straight Tuesdays, and of course it was down yesterday, despite spending 90% of the day in positive territory.
What other streak should we try to end?
Alphabet (aka Google) and Tesla reported earnings after the bell yesterday. Both were down in after hours trading so that doesn't bode well for big tech today, but can the other, broader indices continue to garner more attention with tech potentially faltering today?
The 10-year Treasury Yield was down yesterday, but it was not much of a factor, although it may have helped the small caps outperform. It was the move up in the dollar (UUP) that caused some pricing trouble on Tuesday, especially for the I-fund.
However, the stronger dollar may have also helped the price of oil come down below $77 to a 6-week closing low. This could help with the recent jump in gas prices.
Both the small caps of the Russell 2000 and the Dow Transportation Index had a parabolic move higher earlier this month, but yesterday they diverged a bit as the small caps kept rallying, while the Transports took a big loss. That loss was caused by a 12% sell off in UPS's stock yesterday.
The bulls always want to see the Transports confirming the rally, but perhaps this will be just a one day divergence now that the loss in UPS is priced in?
This morning we'll get an update to the second quarter GDP estimate, and forecasts have been getting better. The estimates are for a gain of 1.9% to 2.3%, so that quite a spread.
On Friday we get the June PCE Prices report.
The S&P 500 (C-fund) was down modestly yesterday and giving up the early gains is not a good sign. If this can't make a move up, like the small caps have done this week, it will look more like a bear flag with last week's sell off being the flag pole. A move up to fill the open gap would negate the bear flag. The trend is still up as long as that trading channel remains intact and / or stays above that 20, or even the 50-day EMAs.
The DWCPF (S-fund) closed off its highs like everything else, but it held onto a solid gain keeping the much anticipated rotation into the broader indices alive. There were possibly too many people talking about this rotation as trades rarely work out when everyone expects the same outcome, but on the flip side many are still in love with the large cap tech stocks and as long as that is true, that means there is still money that can eventually rollover into small caps if the Mag 7 start wobbling, and last night's earnings of Google and Tesla could ignite the next wave of rotation, or sink all boats?
BND (bonds / F-fund) was flat with yields dipping slightly. It is slowly trying to fill that open gap near 72.50, but unfortunately there are several more open gaps below that one. The trend is up as Wall Street anticipates the Fed cutting rates sooner or later.
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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[TR]
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[/TR]
[/TABLE]
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[/TR]
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If you ever want to see a long streak end, just mention it. Yesterday I mentioned that the S&P 500 (C-fund) had been up 11 straight Tuesdays, and of course it was down yesterday, despite spending 90% of the day in positive territory.
What other streak should we try to end?
Alphabet (aka Google) and Tesla reported earnings after the bell yesterday. Both were down in after hours trading so that doesn't bode well for big tech today, but can the other, broader indices continue to garner more attention with tech potentially faltering today?
The 10-year Treasury Yield was down yesterday, but it was not much of a factor, although it may have helped the small caps outperform. It was the move up in the dollar (UUP) that caused some pricing trouble on Tuesday, especially for the I-fund.
However, the stronger dollar may have also helped the price of oil come down below $77 to a 6-week closing low. This could help with the recent jump in gas prices.
Both the small caps of the Russell 2000 and the Dow Transportation Index had a parabolic move higher earlier this month, but yesterday they diverged a bit as the small caps kept rallying, while the Transports took a big loss. That loss was caused by a 12% sell off in UPS's stock yesterday.
The bulls always want to see the Transports confirming the rally, but perhaps this will be just a one day divergence now that the loss in UPS is priced in?
This morning we'll get an update to the second quarter GDP estimate, and forecasts have been getting better. The estimates are for a gain of 1.9% to 2.3%, so that quite a spread.
On Friday we get the June PCE Prices report.
The S&P 500 (C-fund) was down modestly yesterday and giving up the early gains is not a good sign. If this can't make a move up, like the small caps have done this week, it will look more like a bear flag with last week's sell off being the flag pole. A move up to fill the open gap would negate the bear flag. The trend is still up as long as that trading channel remains intact and / or stays above that 20, or even the 50-day EMAs.
The DWCPF (S-fund) closed off its highs like everything else, but it held onto a solid gain keeping the much anticipated rotation into the broader indices alive. There were possibly too many people talking about this rotation as trades rarely work out when everyone expects the same outcome, but on the flip side many are still in love with the large cap tech stocks and as long as that is true, that means there is still money that can eventually rollover into small caps if the Mag 7 start wobbling, and last night's earnings of Google and Tesla could ignite the next wave of rotation, or sink all boats?
BND (bonds / F-fund) was flat with yields dipping slightly. It is slowly trying to fill that open gap near 72.50, but unfortunately there are several more open gaps below that one. The trend is up as Wall Street anticipates the Fed cutting rates sooner or later.
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.
