tsptalk's Market Talk

[tsptalk]

Not a lot of changes as far as yields or the dollar, but stocks are getting one of those bear market rallies. It's Friday and there is several hours of trading left so holding onto these gains is still going to be a challenge, but the indices were well overdue for something like this. The question is whether it's another 2 - 3 day rally or more like something we saw in March that lasted a couple of weeks?.

 

[tsptalk]

The futures were pointing higher when they opened on Sunday evening, but some weaker economic data out of China spoiled that, and now we see some digestion of last week's big rally that ended the week.

The S&P 500 had moved up 200 points or 5% from Thursday's low to Friday's high so some digestion may have been needed, but so far there's been no all out selling of those gains - at least not yet. The news out of China may have just put the breaks on the rally as investors interpret what that means for the U.S.

 

[tsptalk]

A gap up open this morning, and while the gaps are not totally apparent on the chart (I call them stealth gaps) we do have one above and below the current levels now on the S&P 500 - each of which can be a draw. The gaps are basically the space between one day's close and the next day's open that never got filled. More resistance just above 4100 id the S&P can get that high today, but tomorrow that resistance is lower as it remains in that descending channel (blue.)

Fed chair Powell talks later today and he may have be the catalysts to fill one of those gaps. (Stocks Rise Ahead of Powell Talk)

 

[tsptalk]

The lower "stealth" gap that I talked about in the prior post is trying to get filled this morning on the S&P 500 chart after some dismal retail numbers from Walmart and Target. The bottom of the gap needs to hold just above 4000.

Small caps are holding up a little better and the top of it "stealth" gap has been trying to hold so far.

 

[tsptalk]

Are the S&P and small caps (dwcpf) repeating a pattern? If so, the recent lows would need to hold.

The Transports aren't bouncing yet - new lows off the head and shoulders breakdown.

 

[tsptalk]

10 year Yield is trying to bounce back from this morning's breakdown from a bear flag...

 

[tsptalk]

We have a pretty significant decline in the dollar today helping commodity prices - oil, gold, silver, bitcoin - and even stocks have some cushion.

 

[tsptalk]

If you ask 3 economists whether they think there will be a recession in the next year you will probably get three different answers. For me, it's about prices action, chart set ups, and sentiment. There's a lot of extremes right now and the action has been poor. At some point this will turnaround and give us another relief rally and we'll say, why didn't we see that coming? Of course that rally could be another way to suck us in for the next rollover to another low, which is the nature of a bear market.

Be careful, but there will be opportunities here and there.

 

[tsptalk]

Today could be the high volume capitulation reversal day that I've been waiting to see. Unfortunately it's tough to tell until later in the afternoon.

 

[tsptalk]

New lows for the S&P today but the VIX is almost yawning in comparison. It's up but well below the early May readings, and it's similar to the March action before that rally. I suppose there is time for panic to set in today.

 

[tsptalk]

The Transports have hit their downside target (approx 1000-points) below the H&S breakdown. It doesn't mean it can't go lower but technicians may cover shorts here, and we could see some bargain hunting for a short term bounce from here.

This was talked about in Tuesday's commentary: https://www.tsptalk.com/mb/blogs/ts...low-through-but-bears-didnt-press-either.html

 

[tsptalk]

Today could be the high volume capitulation reversal day that I've been waiting to see. Unfortunately it's tough to tell until later in the afternoon.

It's tough to see on this 5-minute chart but there is an increase in volume today compared to Mon - Thu, and that could help get this closer to a low as it tends to be the "get me out at any price" people selling, and if there is any reversal in the final hours of trading, there would be a flush of buyers. Markets don't generally bottom on a Friday but it's not unheard of.

 

[tsptalk]

A nice bounce to start the new week, although small caps are lagging and down this morning. You can't always trust a Monday morning gap opening so we could see some back and forth before we know if this move is for real, or if the bears are pouncing on the opportunity to sell.

The dollar is down sharply and that is helping the I-fund lead to start the day.

 

[tsptalk]

Ahhh, SNAP!! The selling seems more nerves than anything else. I don't know much, if anything about SNAP except that people use it to take pictures on their phone and send it to people. There's concern that their earnings warning is a sign that advertising dollars are being cut. I don't know how much this would concern me. This seems more like an excuse to retrace some of yesterday's gains.

We are in a bear market so I suppose seeing bearish action isn't a surprise, but this seems like an overreaction unless we get a string of these kind of short falls in the social meeting advertising niche.

The 10-year is down - I suppose on the economic concern from SNAP. The dollar is also starting the day on the downside.

 

[tsptalk]

Last Thursday's low on the S&P may be a key level today: 3,877 - make or break for whether we see a test of Friday's lows (3,810).

 

[tsptalk]

Anyone else get the feeling that this isn't about SNAP? What else is brewing - besides all of the obvious.

Bonds prices are up big and that breaks through more resistance. Why the flight to safety now?

 

[tsptalk]

Powell speaking today. Will it make or break the market?

 

[tsptalk]

Today's task for the bulls... get above resistance. Bears task, sell here. There's the battle today.

The dollar is bouncing back a little this morning putting pressure on gold and silver.

 

[tsptalk]

Good action in the credit market this week, but there's still resistance to deal with.

 

[tsptalk]

The 20-day EMA is in the way right now, and could be a bear market rally killer, but once in a while that 50-day EMA will get tested and we get a more meaningful bounce.

The PMO indicator is about to move back above its moving average. This tends to be a bullish sign, but the crossover itself can also be a short-term sign of being overbought. See Feb and early March crossovers below. It usually the 2nd attempt that is the make or break move.

So, some good signs here for more of a rebound, but if this relief rally is going to run out of steam at all, this would be the place.