tsptalk's Market Talk

[tsptalk]

Yields up, dollar down, and the stock market is getting some relief with small caps leading on the upside.

This is rather optimistic of investors with the PPI on deck tomorrow, and the CPI and rate kike next week. I thought maybe we could get a rally off of that data but now maybe it will turn into a set up of buy the rumor, sell the news?

The indices were oversold in the short-term and due for some relief so we'll see if this has any legs, or if the bears are still in the sell the rallies mode.

The initial jobless claims were a little higher than expected so the market seems to be celebrating some weakness in the jobs market, which has become the Fed's target.

 

[tsptalk]

The hotter than expected PPI sent yields higher and initially stocks were down, but they've bounce back as they look for direction in front of next week's big CPI report and Fed meeting.

The S&P 500 is up near the highs of the day but it's looking like a bear flag at the moment. It could break that flag with a move up closer to 4000, otherwise bear flags "tend" to break down.

The market seems to be shaking off the sharp rally in yields, and modest gain in the dollar today as it juggles its concerns between inflation, and weakening economic data.

 

[tsptalk]

Yields and the dollar are down but I thought it was interesting that both the dollar and the S&P 500 are clinging above a major moving average for support, despite the fact that the two have been moving in different directions this year. My guess is one will break below their moving average and other will move in the opposite direction this week.

 

[tsptalk]

This VIX is up 7.6% with stocks up sharply? Hmmm.

 

[tsptalk]

Today's rally feels like one of two possible nefarious situations.

One, the CPI data leaked.

Two, the big money is trying to get the small money to lean on the bullish side before tomorrow's CPI, so they can sell higher.

The other option could be that investors were just too negative and all the bears have sold already, although our most recent TSP Talk Sentiment Survey, while leaning on the bearish side, didn't suggest it was overly extreme for a bear market.

It's too early for the Santa Claus rally.

 

[tsptalk]

It should be an interesting couple of days day. Not only because the CPI just came out slightly cooler than expected, the Dow futures ran up to +1000 points initially, and now about 10 minutes later it is up 600. And, we get the Fed tomorrow who may not see the 0.01% "beat" as benign as the traders are right now.

CPI: https://www.tsptalk.com/mb/the-economy/5251-consumer-price-index-cpi-post681441.html#post681441

 

[tsptalk]

Another bear flag in 2022 that is going to break to the upside...

Before:

After:

 

[tsptalk]

 

[tsptalk]

Yields and the dollar start the day on the downside with the Fed on deck in a few hours. Investors are still digesting the cooler than expected CPI report which suggested that inflation may be easing, hence yields are falling as investors start to brace for the economy fallout from the higher interest rates.

Thursday's initial jobless claims on Thursday may become a focus as the Fed turns away from price inflation and more toward the resilient labor market as a means to gauge inflation.

We are seeing moderate gains in stocks this morning with slow action but we know the fireworks will begin at 2 PM ET when the Fed's policy statement is released.

 

[JTH]

Yields and the dollar start the day on the downside with the Fed on deck in a few hours. Investors are still digesting the cooler than expected CPI report which suggested that inflation may be easing, hence yields are falling as investors start to brace for the economy fallout from the higher interest rates.

Thursday's initial jobless claims on Thursday may become a focus as the Fed turns away from price inflation and more toward the resilient labor market as a means to gauge inflation.

We are seeing moderate gains in stocks this morning with slow action but we know the fireworks will begin at 2 PM ET when the Fed's policy statement is released.

I was moderately disappointed with Tuesdays price action, nearly all of it was in the pre-markets, followed by a sell off at the open.

 

[tsptalk]

We got a double dose of unfavorable data for the stock market this morning, and this come on a day where we are getting the Fed hangover that I talked about in today's commentary.

But the surprise was that they said that they expect the target rate to go to 5.1%, which is higher than the 4.6 that it had previously been saying.
For the market to almost dismiss that, holding up rather well considering the hawkish tone from the Fed, is a little surprising. Perhaps it is a bullish sign as we head into the most favorable seasonal period of the year, or perhaps we will get a hangover going forward after investors digest what was said.

Then we have the initial jobless claims and retail sales this morning. The retail sales came in much weaker than expected and the jobless claims were better than expected, so it was a double dose of trouble as the Fed has been trying to weaken the labor market.

Stocks started the day tumbling, yields were down and the dollar is up.

 

[tsptalk]

This is looking like similar action as the prior quadruple witching week, which didn't turn out well, but we weren't heading into Christmas week back then.

Yields and the dollar are up this morning, but again quadruple witching day can be whippy and there is a purpose to it, one that we may not understand as big money players try to unload option positions that may or may not be in the money.

 

[tsptalk]

Just fill it already, will ya!

 

[rangerray]

That’s what I alluded to in another thread: I have run out of patience.


Scott Harrison
Senatobia, MS

 

[LTJPFED]

Yes, been watching this too as I know a few others have been also. If it fills today, I wonder if we get that bounce and rally into Christmas or it waits until after Christmas. Either way I'm hoping we get at least a few days of green.

 

[tsptalk]

Not a prediction, but here's the 5-minute intraday chart of the last quadruple witching Friday in September...

 

[tsptalk]

Mom and pop will watch the news this weekend and probably get the feeling that they need to sell - if they haven't already. That could set up a bad start to this coming week and maybe fill that gap, but I have to say, watching CNBC on Friday, the bearishness was palpable. I know they usually bring on more guests that concur with that day's action so they appear to be on the right side of the market, but yesterday was different. Most of the guests were darkly bearish, which kind of tells me a bounce is likely brewing.

Not that we'd be heading to new highs or anything, but when no one expects a Santa Claus rally, expect it.

The question is whether it happens, or starts, this week, or next?

Yes, been watching this too as I know a few others have been also. If it fills today, I wonder if we get that bounce and rally into Christmas or it waits until after Christmas. Either way I'm hoping we get at least a few days of green.

 

[tsptalk]

Regarding my previous post, mom and pop must be selling this morning, which is probably what the big money wanted.

Boy, that I-fund continues to outperform the US stocks. The dollar is flat this morning so there's no big advantage for the I-fund today, yet the EFA is up while the US indices are getting getting hit pretty good in the morning trading.

Bonds are down as yields are up, for whatever reason - pre-holiday reversal? I thought the weakening economy was trumping the inflation issue? Not today.

The official Santa Claus rally begins on the 21st, Wednesday, but we do have a pretty good set up for a Turnaround Tuesday -- that is unless we're all expecting it.

2018 left a mark on me. Stocks sold off sharply in December that year, including the entire week before Christmas, and the closing low on Christmas Eve that year marked that "bear market" low. It's in quotes because officially that fall / winter decline was down something like 19.7% and not 20% so it wasn't called a bear market. But that reminded us that stocks are not always up before the holidays.

But mark my words, and hopefully you will forget this if I'm wrong , if stocks are down this week, they should be up next week. But it's early this week and I'm not counting the bullish seasonality out yet.

 

[TommyIV]

2018 left a mark on me. Stocks sold off sharply the entire week before. Christmas and the closing low on Christmas Eve that year marked that "bear market" low. It's in quotes because officially that fall / winter decline was down something like 19.7% and not 20% so it wasn't called a bear market. But that reminded us that stocks are not always up before the holidays.

Yes, but can we also appreciate December of 2018 for the buying opportunity it was?

 

[JTH]

Yes, but can we also appreciate December of 2018 for the buying opportunity it was?

Thanks, I'm in the camp of, "Let's tank December" and ramp of January