Apple? Down! Amazon? Down! Alphabet (GOOG)? Down! Tesla? Down! Palantir? Down! Yet stocks had a strong day yesterday. So we are seeing a tech decoupling from the broader market as the small caps led again yesterday. Bond yields came tumbling down again, breaking below support, and the dollar was down but holding at key support.
You can see the latest updated TSP share prices and returns, usually posted daily by 8:30 PM ET here: https://www.tsptalk.com/tsp_share_prices.php
Nvidia was up over 5% so that helped the Nasdaq avoid a loss, which looked inevitable with Alphabet down 7% yesterday.
But it was the move in yields that really set the tone yesterday as the key level of 4.5% on the 10-year Treasury Yield ($TNX) was broken, and that opened up the flood gates for a sharp decline, and its lowest level of the new year.
The lower yields have been helping small caps, which led again yesterday, but look how closely the inverse of yields is matching the Russell 2000 Index (IWM).
And the inverse of the 10-year yield is basically movement of BND, or our F-fund. The question is, was the breakout in BND (F-fund) a clue for what is coming next for the small caps?
The Russell 2000 (IWM) is not the S-fund, but all of the stock in the Russell 2000 are in the S-fund -- plus another 2500 small and mid-cap stocks, so that's why they don't move precisely in sync, but they rhyme.
Here is that S-fund Index, DWCPF. It's similar to the Russell (IWM) chart, but not exactly. This looks pretty good but it has struggled to get back above 2400 and it didn't fill in that open gap down near 2290. Can it breakout above 2400 without filling that gap first?
The dollar has such a meaningful impact on the I-fund that it is tough to invest in the I-fund without looking at the chart of the dollar. When UUP is moving lower, as it did yesterday, the I-fund tends to outperform the US stocks funds. But the opposite is true and for the second time in a couple of weeks, the UUP chart is trying to find support at the rising 50-day moving average. It's also at the bottom of what looks like a bull flag, so if the dollar does eventually break to the upside as this bull flag suggests, the I-fund may not be as attractive as it had been recently.
Just a couple of days ago I wrote about the Atlanta Fed raising their 1st quarter GDP estimate from +2.9% to +3.9%. Guess what? Yesterday they lowered it back down to 2.9%.
It may have been the weak ISM manufacturing report we got yesterday, which was one of the reasons for the weakness in yields yesterday. So right now there may be a battle starting, or continuing, between wanting lower interest rates and yields, versus getting their through weaker economic data. The stock market may have mixed feelings about this.
The January jobs report comes out on Friday and Amazon reports Thursday after the bell, which means Friday's market open could may be a wild one. The estimates for the January jobs report is for a gain of about 155K - 175K jobs and an unemployment rate of 4.2%.
The S&P 500 (C-fund) chart has a lot of interesting possibilities with that bull flag, the open gap near 5875, and the double top still holding. It is back above the 20-day EMA after successfully testing the 50-day EMA on Monday. It feels bullish but while it is below the double top near 6100 it is vulnerable to the next bearish headline, but that's no way to approach investing or trading - expecting a negative headline. Let's just say there's good potential here, but it's not completely out of trouble yet.
ACWX (the I-fund tracking index) is back near its recent highs after the tariff takedown on Monday. There is some potential resistance near 55, but that could just be a temporary roadblock as the trend seems to be changing. However as we talked about above, it will need the dollar to cooperate if it wants to breakout above that resistance.
BND (bonds / F-fund) had an unusually strong day with those yields braking down yesterday. It's not a coincidence that it peaked where it did because there was a very small open gap filled right at yesterday's high. It would be normal, although not necessary, to make its way down to the breakout area again before being able to bust through 72.80.
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.
| Daily TSP Funds Return
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You can see the latest updated TSP share prices and returns, usually posted daily by 8:30 PM ET here: https://www.tsptalk.com/tsp_share_prices.php
Nvidia was up over 5% so that helped the Nasdaq avoid a loss, which looked inevitable with Alphabet down 7% yesterday.
But it was the move in yields that really set the tone yesterday as the key level of 4.5% on the 10-year Treasury Yield ($TNX) was broken, and that opened up the flood gates for a sharp decline, and its lowest level of the new year.
The lower yields have been helping small caps, which led again yesterday, but look how closely the inverse of yields is matching the Russell 2000 Index (IWM).
And the inverse of the 10-year yield is basically movement of BND, or our F-fund. The question is, was the breakout in BND (F-fund) a clue for what is coming next for the small caps?
The Russell 2000 (IWM) is not the S-fund, but all of the stock in the Russell 2000 are in the S-fund -- plus another 2500 small and mid-cap stocks, so that's why they don't move precisely in sync, but they rhyme.
Here is that S-fund Index, DWCPF. It's similar to the Russell (IWM) chart, but not exactly. This looks pretty good but it has struggled to get back above 2400 and it didn't fill in that open gap down near 2290. Can it breakout above 2400 without filling that gap first?
The dollar has such a meaningful impact on the I-fund that it is tough to invest in the I-fund without looking at the chart of the dollar. When UUP is moving lower, as it did yesterday, the I-fund tends to outperform the US stocks funds. But the opposite is true and for the second time in a couple of weeks, the UUP chart is trying to find support at the rising 50-day moving average. It's also at the bottom of what looks like a bull flag, so if the dollar does eventually break to the upside as this bull flag suggests, the I-fund may not be as attractive as it had been recently.
Just a couple of days ago I wrote about the Atlanta Fed raising their 1st quarter GDP estimate from +2.9% to +3.9%. Guess what? Yesterday they lowered it back down to 2.9%.
It may have been the weak ISM manufacturing report we got yesterday, which was one of the reasons for the weakness in yields yesterday. So right now there may be a battle starting, or continuing, between wanting lower interest rates and yields, versus getting their through weaker economic data. The stock market may have mixed feelings about this.
The January jobs report comes out on Friday and Amazon reports Thursday after the bell, which means Friday's market open could may be a wild one. The estimates for the January jobs report is for a gain of about 155K - 175K jobs and an unemployment rate of 4.2%.
The S&P 500 (C-fund) chart has a lot of interesting possibilities with that bull flag, the open gap near 5875, and the double top still holding. It is back above the 20-day EMA after successfully testing the 50-day EMA on Monday. It feels bullish but while it is below the double top near 6100 it is vulnerable to the next bearish headline, but that's no way to approach investing or trading - expecting a negative headline. Let's just say there's good potential here, but it's not completely out of trouble yet.
ACWX (the I-fund tracking index) is back near its recent highs after the tariff takedown on Monday. There is some potential resistance near 55, but that could just be a temporary roadblock as the trend seems to be changing. However as we talked about above, it will need the dollar to cooperate if it wants to breakout above that resistance.
BND (bonds / F-fund) had an unusually strong day with those yields braking down yesterday. It's not a coincidence that it peaked where it did because there was a very small open gap filled right at yesterday's high. It would be normal, although not necessary, to make its way down to the breakout area again before being able to bust through 72.80.
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.
