We wake up on Monday morning with a different outlook on the world than we had on Friday, after this weekend's horrific event. I don't feel comfortable addressing the assignation attempt as it relates to the stock market and the TSP, but that is what I have to do. Before the shooting I was excited to talk about the rally in stocks last week and the possible long-overdue shift in the broader market outlook after last week's mild inflation numbers, but now this.
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We all deal with tragic events differently so I won't dump my opinions on you, but rather uncomfortably plow ahead with the cold, unemotional, financial situation we are dealing with. My heart goes out to the victims of this hideous act.
How the stock market will react today, I don't know. The futures markets have not opened as of this writing on Sunday morning. Once the smoke of this tragic event clears the market will turn back to the economy, the Fed, and where the stock market is heading, but for now we will have to deal with the emotion and perhaps volatility this may sow.
Friday's PPI Report, the producer wholesale prices, came in a hotter than expected but it does not have the same impact as the CPI Report (consumer prices) which showed a dramatic change in the inflation situation, hence a decline in yields and a rally in stocks.
Market breadth was decisively positive on Friday with 636 new 52-week highs on the NYSE and Nasdaq and just 48 new lows, which is a major flip from just a couple of weeks ago. However, we did see some selling near the close so we have negative reversals and double tops on some of the charts.
The small caps came to life this week and the S-fund led the TSP funds with a 4% gain, but it backed off late on Friday with the rest of the market after nearing the March highs. There are open gaps below and it will be a matter of what the demand is for these smaller companies which had been left behind for months. The S-fund is still more than 10% behind the C-fund for the year so there could be more meat on the bone, if the double top can be penetrated.
The Russell 2000 is not the S-fund fund but basically all of the stocks in the Russell 2000 are also in the DWCPF Index / S-fund. It did make a new high for the year on Friday, but note the negative reversal as it closed well off its highs and is now staring at the open gaps below. Often the old breakout line becomes support once the resistance is broken, but early this week may be more emotional than technical.
Yields were flat on Friday after Thursday's big decline, and it closed near the lows so the pressure remains on the downside as the chart tests the recent lows.
The Equal Weighted S&P 500 Index (same 500 stocks as the S&P 500 Index) also made a new intraday high on Friday, but like everything else, failed to hold at the highs and may also be due for a double top pullback. The recent action in these broader indices has been impressive, although it could be triggered by short-covering rather than outright buying. If it does turn out to be the latter, then the buying might continue.
Earnings season is beginning and it tends to be a bullish time for stocks. It will certainly have a big impact on the stock market, but in the near-term the market may be dealing with a more emotional catalyst.
The S&P 500 (C-fund) managed more gains last week despite the desperately overbought conditions. However, last week many of the underperforming stocks of the S&P 500 got a boost after the positive inflation data, and it could be the start of a rotation into these broader companies. Many of the large cap tech stocks will report earnings over the next few weeks and we may know more about whether investors have given up on the high flyers, or if they just slowed their roll for a while. Add the emotional factor and the chart doesn't seem to mean as much.
The EFA (I-fund) broke out to new highs again as the dollar has been tumbling all month with inflation data getting more favorable. The I-fund is now up double digits for the year with a 10.44% gain.
BND (bonds / F-fund) has also been rallying as yields continue to slide lower on the better inflation numbers and some weakening employment data.
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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We all deal with tragic events differently so I won't dump my opinions on you, but rather uncomfortably plow ahead with the cold, unemotional, financial situation we are dealing with. My heart goes out to the victims of this hideous act.
How the stock market will react today, I don't know. The futures markets have not opened as of this writing on Sunday morning. Once the smoke of this tragic event clears the market will turn back to the economy, the Fed, and where the stock market is heading, but for now we will have to deal with the emotion and perhaps volatility this may sow.
Friday's PPI Report, the producer wholesale prices, came in a hotter than expected but it does not have the same impact as the CPI Report (consumer prices) which showed a dramatic change in the inflation situation, hence a decline in yields and a rally in stocks.
Market breadth was decisively positive on Friday with 636 new 52-week highs on the NYSE and Nasdaq and just 48 new lows, which is a major flip from just a couple of weeks ago. However, we did see some selling near the close so we have negative reversals and double tops on some of the charts.
The small caps came to life this week and the S-fund led the TSP funds with a 4% gain, but it backed off late on Friday with the rest of the market after nearing the March highs. There are open gaps below and it will be a matter of what the demand is for these smaller companies which had been left behind for months. The S-fund is still more than 10% behind the C-fund for the year so there could be more meat on the bone, if the double top can be penetrated.
The Russell 2000 is not the S-fund fund but basically all of the stocks in the Russell 2000 are also in the DWCPF Index / S-fund. It did make a new high for the year on Friday, but note the negative reversal as it closed well off its highs and is now staring at the open gaps below. Often the old breakout line becomes support once the resistance is broken, but early this week may be more emotional than technical.
Yields were flat on Friday after Thursday's big decline, and it closed near the lows so the pressure remains on the downside as the chart tests the recent lows.
The Equal Weighted S&P 500 Index (same 500 stocks as the S&P 500 Index) also made a new intraday high on Friday, but like everything else, failed to hold at the highs and may also be due for a double top pullback. The recent action in these broader indices has been impressive, although it could be triggered by short-covering rather than outright buying. If it does turn out to be the latter, then the buying might continue.
Earnings season is beginning and it tends to be a bullish time for stocks. It will certainly have a big impact on the stock market, but in the near-term the market may be dealing with a more emotional catalyst.
The S&P 500 (C-fund) managed more gains last week despite the desperately overbought conditions. However, last week many of the underperforming stocks of the S&P 500 got a boost after the positive inflation data, and it could be the start of a rotation into these broader companies. Many of the large cap tech stocks will report earnings over the next few weeks and we may know more about whether investors have given up on the high flyers, or if they just slowed their roll for a while. Add the emotional factor and the chart doesn't seem to mean as much.
The EFA (I-fund) broke out to new highs again as the dollar has been tumbling all month with inflation data getting more favorable. The I-fund is now up double digits for the year with a 10.44% gain.
BND (bonds / F-fund) has also been rallying as yields continue to slide lower on the better inflation numbers and some weakening employment data.
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.
