tsptalk's Market Talk

[tsptalk]

Small caps are up and leading on some nice gains in the regional banks, but the chart still has a lot of work to do. The I fund is not far behind with the dollar pulling back. Large caps / S&P 500 are lagging with tech down early on Monday. Bonds and the F-fund are down on rising yields.

 

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After a big rally, small caps hit the wall yesterday and today is the selling. A little bit of support at this morning's low so we'll see how that goes.

Regional Banks aren't the culprit today as they are flat today. It may be yields moving above resistance...

That's causing bond prices and the F-fund to break down a little here. It's early, though.

 

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The day start out with more consolidation, churning, and coiling. Is that the right shoulder of a head and shoulders pattern, or a bull flag? :scratchchin:

 

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Yields and the dollar are up again for some reason - Fed done raising rates, economy strengthening, etc., I don't know.

A gap was filled on the dollar chart (blue), while opening up another one below this morning (red). That's three open gaps below on UUP. This is putting pressure on the I-fund.

 

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The Russell 2000 small cap index is outperforming the DWCPF (S-fund) by a bit this morning. Since the open gap near 171 was filled, and a bull flag has formed, can this finally break above the 50-day EMA? A flag-like pattern failed badly back in April.

Also, all of this action over the last two months is part of an even bigger bear flag.

I think once resistance is broken convincingly, this could rally quite a bit. But it has to do that first.

 

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I'm intrigued with small caps, which could be at the end of their line being near the 50-day EMA in this long bear market, or at the cusp of a breakout above resistance which could trigger a big rally.

The DWCPF, our S-fund, is trading above the 50-day EMA this morning.

 

[tsptalk]

Hmm, promising.

S-fund

 

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Some early gains have evaporated while Jerome Powell speaks on monetary policy....

https://www.cnbc.com/2023/05/19/watch-fed-chairman-jerome-powell-speak-live-on-monetary-policy.html

Small caps have already given up all of yesterday's gains.

It could be an emotional move that reverses when he's done. I'm not sure. I had not been listening so I haven't heard what he's been saying.

We had a couple of big positive candlesticks on the S&P 500 chart from Thursday that was probably due to get retraced before going forward again.

 

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This is a nice development, after a near breakdown last week. The bull flag appears intact.

HYG = High Yield Corporate Bond Fund - credit market

 

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Small caps leading

 

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Stocks came out of the gate wobbling on Tuesday, however for a second straight day the small caps (S-fund) are leading, posting a modest gain this morning.

Yields continue to rise as the open gap on the 10-year appears to be a target. Some are blaming the debt ceiling standoff for the rise in yields as the US debt will increase and they'll have to issue more bonds.

 

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This pesky little chart looks great one day, and on the verge of a breakdown the next.

High Yield Corporate Bonds -

The dollar strength is a drag on the stock market and is a direct result of the Fed reducing their balance sheet after the infusion in March when the banks were failing.

 

[tsptalk]

Seasonality is a tendency and rarely a primary indicator so consider that before taking this as a roadmap. Plus the holiday reversal possibilities, and who knows?

May and June seasonality charts for the last 30 years:

Source: https://www.sentimentrader.com

 

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Interesting day ahead after Nvidia earnings last night. The S&P and Nasdaq futures are up big - Naz more than 2%, yet the Dow and small caps are down since neither of those indices hold Nvidia.

The repeating pattern may continue today if the gains hold into the close in the S&P, which may be a tall order.

 

[tsptalk]

Gaps. Technically there is a gap open down to yesterday's close. Also one just below 4070 from May 5 jobs report. I call them "stealth" gaps because they are tougher to see that normal open gaps. Yesterday's "normal" open gap down was filled this morning.

 

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Futures are up although it's another very mixed bag. The Dow futures are down while the Nasdaq futures are up big (1.4%).

Yields open lower and fall below recent support, helping tech stocks rally.

 

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The grinding, repeating pattern continues as the rallying candlesticks get retraced, then test support, seems to be repeating again. There's no guarantees that support will hold this time, or that a debt deal will change this pattern, but for now, it's repeating.

It's actually a good looking consolidation and the prospects of a breakout to the upside are surprisingly promising despite the economic and debt turmoil, but whichever way this finally breaks it will likely be a big move because of how far this double top / cup formation spans - three months.

 

[tsptalk]

Another mixed day to start Thursday trading. The Dow is down nearly 200-points while the Nasdaq is pushing into positive territory. The S&P is flat. S-fund is down slightly and the I-fund is up because...

Yields and the dollar are down and the dollar is pushing back from a double top.