A top heavy rally for the stock market yesterday may have created some FOMO, but if you were listening carefully you could hear a sucking sound as they reeled in investors despite many negatives that didn't show up in the indices. The Dow gained 224-points, and the S&P 500 gained almost 1%, thanks to the big gain in Alphabet (Google). If you take out Google, it wasn't so so good. Plus we had some after hours trouble that could pose a problem for stocks today. The dollar was down and bonds were up.
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[TD="align: left"] Meta Platforms, Inc. (FB) [/TD]
[TD="align: left"]
[/TD]
[TD="width: 231, align: left"] 323.00
+4.00 (+1.25%)
At close: 04:00PM EST [/TD]
[TD="width: 256, align: left"] 253.38
-69.62 (-21.55%)
After hours: 4:35PM EST [/TD]
[TD="width: 231, align: left"]
[/TD]
[TD="width: 256, align: left"]
[/TD]
[TD="width: 231, align: left"] S&P 500 ETF Trust (SPY) [/TD]
[TD="width: 256, align: left"]
[/TD]
[TD="width: 231"] 457.35
+4.40(+0.97%)
At close: 04:00PM EST [/TD]
[TD="width: 256"] 454.18
-3.17 (-0.69%)
After hours: [/TD]
[TD="width: 231, align: left"]
[/TD]
[TD="width: 256, align: left"]
[/TD]
[TD="width: 231, align: left"] QQQ Trust (Naz 100) [/TD]
[TD="width: 256, align: left"]
[/TD]
[TD="width: 231, align: left"] 368.49
+2.97(+0.81%)
At close: 04:00PM EST [/TD]
[TD="width: 256, align: left"] 362.42
-6.07(-1.65%)
After hours: 04:38PM EST [/TD]
And even before Facebook reported, the big gains in the indices were masking internal issues. We saw small caps down sharply, and look at the advance / decline numbers for the NYSE and Nasdaq -- on a day where we saw a 1% gain in the S&P 500:
I've been posting those charts of the start to 2008 and 2016 where awful Januarys in those years saw relief rallies later in the month, and on both charts the peak of those rallies ended on Feb 1. I thought that could be the case again this year after what we just saw in January, and the bounce at the end of the month, and while we did see a higher high on Feb 2 this year, the internals may be indicating that the broader market did peak on Tuesday 1st. Regardless, it would have been cool to have called exactly right, but there was nothing magical about that specific date, but rather that relief rallies are common in descending markets and this current rally is probably running out of steam, the way they did in 2008 and 2016.
The yield on the 10-year was down but remains in a tight range, which looks like a bullish flag.
The dollar fell again and this time it landed below the 50-day EMA. Good for the I-fund and commodities, but it may also mean higher oil and gas prices, and prices in general as inflation remains an issue.
So after Google propelled the market indices higher on Wednesday, Facebook's earnings are threatening those gains and could weigh on the indices today. After the bell today we'll get Amazon's earnings, another market mover, so don't take your seatbelt off just yet.
The January jobs report comes out on Friday. Estimates are looking for 180,000 jobs being added, and an unemployment rate of 3.9%. Hourly wages are expected to rise by 0.5%.
The S&P 500 (C-fund) kept its relief rally going another day thanks to strong earnings from Alphabet. As I mentioned above, the action was not as strong as the indices might imply, but the C-fund pays based on the gain or loss in the index and not on the internal data. I still think a test of the lows is possible, and I'm not looking out much further than that. That test could hold, or fail, I don't have an opinion yet. What would surprise me is if the S&P went right back up to new highs first, as we have seen repeatedly over the last couple of years.
The DWCPF (small caps / S-fund) did not have a good day and again, it's because Google is part of the large cap indices, so without Google, the small caps indices didn't get any help. The chart failed at a stubborn resistance area near 2000.
The EFA (I-fund) had a good day and once again the dollar's decline is helping this index do relatively well compared to the U.S. stock funds.
BND (Bonds / F-fund) was up but there was negative reversal created after a failed breakout. Not good.
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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Google ended the day up 7.4% which is a huge move for a company of that size. It's not part of the Dow but it is a big part of the S&P 500 and Nasdaq so they were rewarded handsomely yesterday.
The bad news... after hours Meta Platforms, aka Facebook, reported a miss on earnings, and in the blink of an eye yesterday's gains in the Nasdaq were turned into steep losses, and the S&P 500 futures lost most of their 1% gain. There's a long way until Thursday's open, I'm writing this on Wednesday evening, but we certainly see that volatility is going to continue.
Here's some after hours and futures quotes shortly after the market closed yesterday:
The bad news... after hours Meta Platforms, aka Facebook, reported a miss on earnings, and in the blink of an eye yesterday's gains in the Nasdaq were turned into steep losses, and the S&P 500 futures lost most of their 1% gain. There's a long way until Thursday's open, I'm writing this on Wednesday evening, but we certainly see that volatility is going to continue.
Here's some after hours and futures quotes shortly after the market closed yesterday:
[TD="align: left"] Meta Platforms, Inc. (FB) [/TD]
[TD="align: left"]
[/TD]
[TD="width: 231, align: left"] 323.00
+4.00 (+1.25%)
At close: 04:00PM EST [/TD]
[TD="width: 256, align: left"] 253.38
-69.62 (-21.55%)
After hours: 4:35PM EST [/TD]
[TD="width: 231, align: left"]
[/TD]
[TD="width: 256, align: left"]
[/TD]
[TD="width: 231, align: left"] S&P 500 ETF Trust (SPY) [/TD]
[TD="width: 256, align: left"]
[/TD]
[TD="width: 231"] 457.35
+4.40(+0.97%)
At close: 04:00PM EST [/TD]
[TD="width: 256"] 454.18
-3.17 (-0.69%)
After hours: [/TD]
[TD="width: 231, align: left"]
[/TD]
[TD="width: 256, align: left"]
[/TD]
[TD="width: 231, align: left"] QQQ Trust (Naz 100) [/TD]
[TD="width: 256, align: left"]
[/TD]
[TD="width: 231, align: left"] 368.49
+2.97(+0.81%)
At close: 04:00PM EST [/TD]
[TD="width: 256, align: left"] 362.42
-6.07(-1.65%)
After hours: 04:38PM EST [/TD]
And even before Facebook reported, the big gains in the indices were masking internal issues. We saw small caps down sharply, and look at the advance / decline numbers for the NYSE and Nasdaq -- on a day where we saw a 1% gain in the S&P 500:
I've been posting those charts of the start to 2008 and 2016 where awful Januarys in those years saw relief rallies later in the month, and on both charts the peak of those rallies ended on Feb 1. I thought that could be the case again this year after what we just saw in January, and the bounce at the end of the month, and while we did see a higher high on Feb 2 this year, the internals may be indicating that the broader market did peak on Tuesday 1st. Regardless, it would have been cool to have called exactly right, but there was nothing magical about that specific date, but rather that relief rallies are common in descending markets and this current rally is probably running out of steam, the way they did in 2008 and 2016.
The yield on the 10-year was down but remains in a tight range, which looks like a bullish flag.
The dollar fell again and this time it landed below the 50-day EMA. Good for the I-fund and commodities, but it may also mean higher oil and gas prices, and prices in general as inflation remains an issue.
So after Google propelled the market indices higher on Wednesday, Facebook's earnings are threatening those gains and could weigh on the indices today. After the bell today we'll get Amazon's earnings, another market mover, so don't take your seatbelt off just yet.
The January jobs report comes out on Friday. Estimates are looking for 180,000 jobs being added, and an unemployment rate of 3.9%. Hourly wages are expected to rise by 0.5%.
The S&P 500 (C-fund) kept its relief rally going another day thanks to strong earnings from Alphabet. As I mentioned above, the action was not as strong as the indices might imply, but the C-fund pays based on the gain or loss in the index and not on the internal data. I still think a test of the lows is possible, and I'm not looking out much further than that. That test could hold, or fail, I don't have an opinion yet. What would surprise me is if the S&P went right back up to new highs first, as we have seen repeatedly over the last couple of years.
The DWCPF (small caps / S-fund) did not have a good day and again, it's because Google is part of the large cap indices, so without Google, the small caps indices didn't get any help. The chart failed at a stubborn resistance area near 2000.
The EFA (I-fund) had a good day and once again the dollar's decline is helping this index do relatively well compared to the U.S. stock funds.
BND (Bonds / F-fund) was up but there was negative reversal created after a failed breakout. Not good.
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Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
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.
Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
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.
