tsptalk's Market Talk

[tsptalk]

Stocks are rallying this Friday morning, and the S&P 500 is back up testing its 20-day EMA. This held a couple of times in recent months but in late May it had enough momentum to break above it before stalling at the 50-day EMA, which is still more than 100 points above the current level. One gap was filled and there is another just above 4000.

 

[tsptalk]

The rare open gap on the weekly chart has now been filled. That "could" be the upside target, or...

... the top open gap on the daily chart (red) could be next, which is above 4000 and would likely coincide with that 50-day EMA, which is currently 4041 but sliding lower each day.

 

[tsptalk]

The market is digesting last week's big rally (about 6.5%) and we have a bit of a stalemate as the very short term indicators get overbought. However, longer term the indicators are still oversold so there is interest from both sides to either take some short term profits, yet the folks who missed the rally may be looking to buy the dips.

Fundamentally the Fed is putting the screws to the market with their hawkish stance, but technically there are some overhead targets on the charts that may get tagged before this rolls back over - if it does roll back over.

As I have said before, the open gap targets were so obvious that it may be too easy and that's why I have been thinking either the relief rally falls short of filling the upper gap, or it overshoots that gap and more FOMO ensues, because it's rarely as easy as we think it could be.

 

[nasa1974]

Not happy seeing red, but I'll take a red .11% over a red 1.10% at closing. :nuts:

 

[tsptalk]

Sorry for the late post. I was busy with the Plus premium service strategies this morning.

So a 1% opening bell rally has now turned into a 1% loss a couple of hours later. Gaps on both sides of the indices had us trying to guess which would get filled first. This morning's rally had us believing the upper gap was the target, but the pros on Wall Street had another idea. And the 7% rally that JP Morgan predicted for this week (been talking about this in the daily commentary) probably was their way to get you to buy so they could sell.

Now we have ugly negative outside reversal day formations on the charts.

 

[tsptalk]

Just minutes after the opening bell and it's kind of a moment of truth for the C and S funds as they fill their open gaps from last Friday. It could hold or we'll probably see a test of the recent lows.

The I-fund is still above its open gap but there is a lot of room below if it doesn't hold above it.

 

[tsptalk]

Just minutes after the opening bell and it's kind of a moment of truth for the C and S funds as they fill their open gaps from last Friday. It could hold or we'll probably see a test of the recent lows.

It's still early but so far the bottom of that gap is holding.

 

[tsptalk]

Staying with the gaps theme, another gap was opened with this morning's sell off.

There was a very small full open gap near 3700, but because the S&P closed closer to 3675 on the 17th, that can be considered a stealth gap. Those are gaps between the prior day's close and the next day's lows.

 

[tsptalk]

The trend is down and any buying is going against the trend, but I can't help wonder if the S&P wanted to test that 50-day EMA, fill that gap up near 4000, but the pre-holiday reversal took over this week? Not sure, but if that's the case we could see a reversal back up next week. That's a risky bet but possible. After that... too much resistance.

With the dollar making new highs, and if it holds it would be a new closing high, all prices remain under pressure. Commodities are up some this morning somehow, but they have been beaten down badly recently with this strength in the dollar.

 

[tsptalk]

I'd be surprised if this rally holds into the close before 3-day weekend...

5-minute chart:

 

[tsptalk]

It's holding up pretty well. New month, new quarter, new money I suppose. Next week will be a test, however.

Closing update:

 

[tsptalk]

Look at that Bond ETF make its way above the 50-day EMA for the first time all year. This is what our F-fund tracks. There's more resistance above but we may finally be seeing the door open to the F-fund as a possible investment again - at least as long as the economy appears to be slowing.

 

[tsptalk]

.... and look at the dollar making new highs after breaking out above the cup and handle. This is continuing to put pressure on commodities. Oil is down almost $5 a barrel, gold, silver, corn, wheat, etc., are all down.

 

[DreamboatAnnie]

FBN reported that oil being down is a sign of recession. Maybe that is why market is dropping.

 

[FireWeatherMet]

FBN reported that oil being down is a sign of recession. Maybe that is why market is dropping.

I think a Recession has already been priced in.
Definition of Recession is 2 straight quarters of negative GDP. We already had -1.6% GDP 1st qtr of 2022 and estimates are of an even higher negative # this quarter.

But price of oil is almost entirely GLOBAL supply and demand, minus refinery issues and geopolitical (WAR).
So in 2020 OPEC...at the request of the then-US President (trying to not get too political) agreed to CUT Oil Production. Oil prices then took off ever since, combining with post "Severe Covid" travel demands in 2021 as well Russian invasion/sanctions early 2022.
https://www.cnbc.com/2020/04/13/ope...st-and-most-complex-deal-ever-dan-yergin.html

However, that 2 year Oil Production Cut deal just ended, and OPEC just announced Oil Production HIKES, to go into effect next month, which almost always tends to lower oil prices, especially when coupled with the recent drop in demand as gasoline prices are at record high levels, less people taking long road trips, boating or driving RV's.
https://www.cnbc.com/2022/06/30/ope...l-production-hike-supply-concerns-linger.html

So I doubt its mostly based on recession fears, as we probably "technically" started recession back in January and the near 30% drop in the S&P from recent highs likely priced most of that in. I think its mostly supply & demand...just basic Capitalism.
This could be good news for all of us, as lowering oil prices by itself would eventually lead to lower prices at the pumps, combined with the fact that after July 4th we are going past the summer-time travel peak.
This could help with inflation soon....which could reduce the fears of massive future rate hikes...and might make markets soar sooner rather than later....meaning we might be closing in on our market lows (hopefully) and might need to think about getting in, and staying in, stocks soon. IMHO.

 

[tsptalk]

The early action sees the dollar up again - oil is down to $98, yields are up slightly and stocks chopping between gains and losses.

The Transports are down sharply and have been moving sideways making its own bear flag.

 

[tsptalk]

Big test for small caps at the 20-day EMAs - Russell 2000 (IWM) and DWCPF (S-fund).

 

[tsptalk]

The post holiday rally continues as the S&P is up for a thirst straight day, although lately what we see in the morning isn't always what we get at the close.

Yields are up again and the 2/10 year bond inversion is getting deeper. High Yield Corp. bonds are up big but against a bear flag and resistance so it has more work to do.

The dollar is flat and oil is moving up sharply higher again - back over $103 barrel after falling below $95 a couple of days ago.

There's a path to the open gap near 4000 on the S&P 500 but we see several bear flags on the index charts as well.

 

[tsptalk]

A much stronger than expected jobs report sent stocks lower initially, but they've come roaring right back.

The concern is that the strong report has inflationary implications. Remember, it was not weakening economic data that caused the bear market. It was inflation. And the slowdown was a consequence of the Fed reacting to the inflation by raising rates. Strong economic data will more than likely strengthen their resolve to hike.

Yields are up on the economically strong report, and the price of oil is rallying on this news as well. Higher yields and higher gas prices have been causing the stock market some issues, but not today - at least as of 11:30 AM ET.

High Yield Corporate Bonds are down slightly on the day as I watch the bear flag on that chart (not shown.)

 

[tsptalk]

There goes the dollar again, putting more pressure on prices of commodities, gold, silver, bitcoin, and on a good note - oil.

Stocks are down as investors continue to digest the strong jobs report, and brace for the important CPI report on Wednesday, and bank earnings later in the week. Also, the run on the banks in China isn't helping.