The Dow was down 188-points but stocks were mixed more broadly, and it was quite a choppy day as an early rally eventually faded after the S&P 500 hit its 50-day average. The index rolled over and went negative in afternoon trading but made its way back to break-even just in time for Nvidia to reports its earnings after the closing bell. Yields continue to slide lower had another gain.
Nothing too exciting and basically. The question is whether stocks can rally on the relief that is was not a dud, or if it will be considered not good enough, and the decline in stocks continues.
The action yesterday wasn't very inspiring as a big early rally completely failed again, but at least the bulls were able to keep the S&P 500 out of the red by the close - although just barely. I assume there was too much riding on Nvidia's earnings after the bell for commitment from either side. The S&P stalled at the 50-day EMA, which is a typical initial reaction after falling below it. See the other 50-EMA breakdowns in purple.
Those prior breakdowns all eventually made it back above the average in a reasonable amount of time, but that's not a guarantee that it will happen again. There is other support areas that, if they hold, could mean the blue bull flag is still in play.
Barron's article this week said, "The M2 Money Supply Posts Its Biggest Gain in 30 Months." This is big and as I have been talking about, liquidity is good for almost all assets. The credit market also remains solid with the High Yield Corporate Bonds at all time highs, which is basically an endorsement for risk on. Not that volatility is going necessarily going away, but this may put a cushion under stocks and it would take quite a jolt of news to keep the bulls from buying the dips.
I got this chart from someone who was actually comparing Bitcoin (blue line) to the Global M2 Liquidity (green), and while we see that liquidity tends to lead bitcoin, it also tends to lead other assets as well, including the stock market, so this looks promising.
The 10-year Yield continued its decline yesterday as it is now down to 4.25%, which is a relief and the direction should be rewarding growth stocks, but so far the stock market has been unimpressed as the falling yields has been a result of economic growth concerns. I see it as another bullish piece of the puzzle, but in the short-term, volatility could stick around.
The market leading, economically sensitive, Dow Transportation Index closed at its lowest level of the year yesterday. That head and shoulders pattern is not a very bullish formation, and that support is just barely hanging on. It has also closed below the 200-day moving average for the third straight day, so it's getting serious.
The longer term chart shows support in the 15,700 - 15,750 area, so there's some hope, but I don't like the look of either of those charts.
We will be saying goodbye to February at the end of the week, and all I can say is, good riddance.
DWCPF (S-fund) broke below some key support this week after the 130-day EMA broke, but so far the 200-day average is still holding. There is a large bullish looking flag forming but the bottom of that flag, if tested, would push it below that 200-day average. It's very touchy, as many charts are right now.
ACWX (the I-fund tracking index) has been doing just fine, although yesterday we arguably saw a negative reversal day despite yet another gain for the international fund. A move to 55 in March would certainly pique my interest and get me to consider buying some. I've missed this boat.
BND (F-fund) broke above the ascending trading channel this week and now it is creeping into that open gap from October. That could pose some potential resistance once it gets filled.
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.
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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 may use additional methods and strategies to determine fund positions.
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The initial reaction to Nvidia's earnings was rather flat to negative, but buying picked up as the report was further analyzed. This could completely change by the time you read this as the conference call was just getting started, but as of this writing, here's what I was seeing...
Nothing too exciting and basically. The question is whether stocks can rally on the relief that is was not a dud, or if it will be considered not good enough, and the decline in stocks continues.
The action yesterday wasn't very inspiring as a big early rally completely failed again, but at least the bulls were able to keep the S&P 500 out of the red by the close - although just barely. I assume there was too much riding on Nvidia's earnings after the bell for commitment from either side. The S&P stalled at the 50-day EMA, which is a typical initial reaction after falling below it. See the other 50-EMA breakdowns in purple.
Those prior breakdowns all eventually made it back above the average in a reasonable amount of time, but that's not a guarantee that it will happen again. There is other support areas that, if they hold, could mean the blue bull flag is still in play.
Barron's article this week said, "The M2 Money Supply Posts Its Biggest Gain in 30 Months." This is big and as I have been talking about, liquidity is good for almost all assets. The credit market also remains solid with the High Yield Corporate Bonds at all time highs, which is basically an endorsement for risk on. Not that volatility is going necessarily going away, but this may put a cushion under stocks and it would take quite a jolt of news to keep the bulls from buying the dips.
I got this chart from someone who was actually comparing Bitcoin (blue line) to the Global M2 Liquidity (green), and while we see that liquidity tends to lead bitcoin, it also tends to lead other assets as well, including the stock market, so this looks promising.
The 10-year Yield continued its decline yesterday as it is now down to 4.25%, which is a relief and the direction should be rewarding growth stocks, but so far the stock market has been unimpressed as the falling yields has been a result of economic growth concerns. I see it as another bullish piece of the puzzle, but in the short-term, volatility could stick around.
The market leading, economically sensitive, Dow Transportation Index closed at its lowest level of the year yesterday. That head and shoulders pattern is not a very bullish formation, and that support is just barely hanging on. It has also closed below the 200-day moving average for the third straight day, so it's getting serious.
The longer term chart shows support in the 15,700 - 15,750 area, so there's some hope, but I don't like the look of either of those charts.
We will be saying goodbye to February at the end of the week, and all I can say is, good riddance.
DWCPF (S-fund) broke below some key support this week after the 130-day EMA broke, but so far the 200-day average is still holding. There is a large bullish looking flag forming but the bottom of that flag, if tested, would push it below that 200-day average. It's very touchy, as many charts are right now.
ACWX (the I-fund tracking index) has been doing just fine, although yesterday we arguably saw a negative reversal day despite yet another gain for the international fund. A move to 55 in March would certainly pique my interest and get me to consider buying some. I've missed this boat.
BND (F-fund) broke above the ascending trading channel this week and now it is creeping into that open gap from October. That could pose some potential resistance once it gets filled.
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 may use additional methods and strategies to determine fund positions.
