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tsptalk's Market Talk
- Thread starter tsptalk
- Start date
Stocks and yields are down (bond prices up) as the Walmart earnings warning reverberates through the market. Microsoft and Google report after the bell today and of course the Fed meeting starts today and they will announce a rate hike tomorrow. The recent rally off the June lows hit some resistance last week and we have seen some profit taking since.
With some major catalysts on deck, the relief rally is going to be tested this week, along with the top of the bear flag which has been developing since mid-June.
With some major catalysts on deck, the relief rally is going to be tested this week, along with the top of the bear flag which has been developing since mid-June.
The market is happy with Google and Microsoft's guidance and took back yesterday's losses within minutes of the opening bell. There was a stealth gap filled between Monday's close and Tuesday's highs this morning already, so we'll see if it stall there.
The S&P is back above its 50-day EMA while the S-fund chart (dwcpf) is bumping up against it to start the morning.
The S&P is back above its 50-day EMA while the S-fund chart (dwcpf) is bumping up against it to start the morning.
Just hit 4018 so the gap is officially filled.
Is this a bear market rally? The longer it goes, the more that will be questioned, but take a look at the 2008 bear market and the similar bearish flags. Both also broke some descending resistance, just like the current one has done. One made it above the 200-day EMA, the second didn't. One lasted two months, the second about 6 weeks. This current rally is about 5 weeks old.
Stocks started the day on the downside, but we did see some buying at the opening dip. The S&P is at a key resistance area just below 4200 and also the 200-day EMA which, to be honest, hasn't been a major factor this year. Since things tend to go further than most expect, the line near 4400 could be in play as well, but it has to leap frog the 4150-4200 area first, so we will see if the bulls have anything left after the nearly 14% rally off the June low.
The VIX is trying to bounce off of long term support...
The VIX is trying to bounce off of long term support...
Stocks opened the day higher by quite a bit as the S&P chops around in another consolidation area. The top of that bear flag (blue) has been doing a good job of holding as support since the breakout. June started out similarly, but "they" know that and may try to trick everyone into guessing wrong.
Bonds are down again this morning with yields moving up again (they move counter to each other.) It did move back into the H&S pattern but as we talked about recently, that open gap is almost always going to be a draw before it does anything else. The trend in yields remains down, within a bearish head and shoulders pattern, so this will have to show me it can move above 2.9% and break that trend before bonds (F-fund) get bearish again.
Bonds are down again this morning with yields moving up again (they move counter to each other.) It did move back into the H&S pattern but as we talked about recently, that open gap is almost always going to be a draw before it does anything else. The trend in yields remains down, within a bearish head and shoulders pattern, so this will have to show me it can move above 2.9% and break that trend before bonds (F-fund) get bearish again.
A little weakness in stocks this morning as yesterday's big gains get digested. But the more interesting aspect is that the yield on the 10-year and the dollar have backed off from that big Tuesday / half of Wednesday rally, and the head and shoulders breakdown is back in action, so it looked like a knee-jerk reaction to the Fed's "threat" of staying aggressive on inflation.
The initial reaction to the jobs report was quite negative as the S&P 500 futures were down 48-points at the lows, but since the opening bell they've erased more half of that.
The number is a little unbelievable after 2 negative GDP quarters but it is what it is, and investors will have to place their bets on this info. Why are stocks down on this massive report? The Fed may have to get even more aggressive with interest rates because they are trying to hurt the jobs market, not help it.
Yields spiked back up after a perfect head and shoulder breakdown, but it never did fill in that open gap so is this a little kabuki theater, as one analyst likes to call it, to fill that gap near 2.9%?
HYG has been the driving force of the recent rally, and it had a bit of a breakdown itself this morning, but it's early and it's already off its lows.
The number is a little unbelievable after 2 negative GDP quarters but it is what it is, and investors will have to place their bets on this info. Why are stocks down on this massive report? The Fed may have to get even more aggressive with interest rates because they are trying to hurt the jobs market, not help it.
Yields spiked back up after a perfect head and shoulder breakdown, but it never did fill in that open gap so is this a little kabuki theater, as one analyst likes to call it, to fill that gap near 2.9%?
HYG has been the driving force of the recent rally, and it had a bit of a breakdown itself this morning, but it's early and it's already off its lows.
Yields and the dollar are pulling back after Friday's rally, and stocks are bouncing after the early Friday jobs report "scare."
The S&P has nudged up to its 200-day EMA and may look to go a little further to simulate a breakout and suck more people in. You can see in the 1-year chart below that they tend to fake us out with those breakouts / breakdowns before reversing.
The S&P has nudged up to its 200-day EMA and may look to go a little further to simulate a breakout and suck more people in. You can see in the 1-year chart below that they tend to fake us out with those breakouts / breakdowns before reversing.
Are they going to make it that easy - a pullback off the double top / 200-day EMA? I hope so, but probably not. The CPI tomorrow could change everything. I hope I'm wrong but I think they will try to break this out above resistance, then pull it back down after they've sucked in more victims. Although if the CPI is benign enough, perhaps a breakout that holds is possible. The jobs report last Friday showed us any number is possible.
Yields are staying stubbornly buoyant above the neckline of that head and shoulders pattern and perhaps still trying to fill that open gap.
Yields are staying stubbornly buoyant above the neckline of that head and shoulders pattern and perhaps still trying to fill that open gap.
Looks like today will be the day that they run short stops above resistance. But will it hold or will it be another fake out like in the chart below?
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