tsptalk's Market Talk

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Two of the most recently beaten down, key charts are having big bounces today. The HYG and the Transports.

Good signs but in front of tomorrow's Fed meeting and rate hike, and being a quadruple witching expiration week, it's tough to trust anything.

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What happens to the "g" fund rate when the Fed hikes interest rates??

Our G fund will earn more. It usually takes until the end of the month before the daily rate shows up enough difference to tell, but yes, when the fed increases interest rates, our G fund payout also changes based on market interest rates, and G will pay out slightly more. It doesn’t always match exactly what the fed does- I.e. the G fund payout rate might not go up by exactly 0.75% on an annual basis, but it will move.

The G rate of return used to be close to the 30 year T-bill. However, previous administrations lowered the G fund payout, and these days it is closer to the 5-year rate than the 30 year rate.


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Reminder: Friday is a quadruple witching expiration day.

It won't matter if it's capitulation or not, volume will spike dramatically, perhaps making it appear as if it was a capitulation day.
 
A failed morning rally after the futures were positive all night.

The Nasdaq and small cap are clinging to a small gains while the S&P in now negative testing yesterday's lows.

Oil is down sharply at 111 a barrel on the futures market, which should help.

Quadruple witching should make it an interesting day.
 
Those indicators that worked so well during the bull (sentiment, bollinger band bounces, breadth thrusts) continue to fail. Oversold has gotten even more oversold. I don't think many are ready for a ride to 3,500 or lower this summer as there is still a lot of hope. Earnings are going to have to come in "less worse" than expected because forward guidance is not going to be positive.
 
The dollar is down helping prices move up in just about everything, although yields are up so bonds are down a bit.

The Transports and HYG (high yield Corp Bonds) are up but lagging the S&P and Nasdaq's gains.

So the action is good, perhaps a start to trying to fill in the two larger over gaps, but it would be nice to see those two market leaders roaring higher with the rest of the market.

I think the market is working backwards as last week was the positive bias expiration week and this week was normally the unwinding of that.

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Stocks claw their way back from some severe overnight futures losses. So far this looks healthy as the charts back and fill some of Tuesday's big gains.

We're in a bear market but the bulls will occasionally have their day in the sun as the selling exhausts itself. We see that with oversold indicators and extremely negative sentiment.

It could take days, weeks, or even months to play out sometimes depending on the situation and how volatile stocks have been.

The open gaps overhead, and they are quite a bit above the current level, are obvious potential targets, but as I mentioned in today's Market Commentary, those levels look too obvious and that could be setting up some kind if anomalous move, whether extreme to the upside or more shallow and not completely filling all of the gaps.

We may now be in a short term buy the dip environment but expect the unexpected.

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The small caps are lagging some this morning, but the early weakness was constructive in that it was able to fill the small open gap (red) from Tuesday, as well as the larger "stealth gap" between Friday's close and Tuesday's low (purple) -- and hold.

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Some decent gains in stocks after a typical choppy opening bell. The biggest mover today has been the drop in the 10-year yield as the market starts to price in the slowdown in the economy. Right now it is flirting with heading back below 3%.

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The S&P 500 has been slowly moving off the lows so no explosive bear market rally yet,. Right now I'm watching to see if this is going to target the overhead open gaps, or if it is going to form some kind of a bear flag while consolidating, and floundering just off the lows.

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