tsptalk's Market Talk

[tsptalk]

We got the gap up in Nvidia and the indices, and unlike the May gap up in NVDA, this one has already nearly filled the gap. The bottom of that gap or even 480 could try to hold as support now hat it has broken thru resistance.

As for the rest of the market, we've seen quite a run in the last week and the question is whether the bears are ready to pounce again, or if the bulls have some staying power.

The chart still looks very "V" bottomy, but any backing and filling could cause a bear flag to form.

Jerome Powell at Jackson Hole tomorrow means anyone looking to make an allocation change before that meeting has until noon ET today to do so.

The weekly Initial Jobless Claims came in slightly lower than expected and also below last month. Does the Fed still prefer higher unemployment?

Yields are up modestly this morning after yesterday's sharp move lower.

 

[tsptalk]

 

[tsptalk]

Today is day #2 after the large negative outside reversal day and it is retracing the breakdown candle. Looks familiar, huh?

For the bulls to take charge again, this is where they would need to step in and keep the chart from doing what negative reversals tend to do... what it did in early August.

 

[tsptalk]

I've been concerned about some of the bear flag formations we've seen develop on the index charts, but this move in the EFA (I-fund) looks encouraging. The 50-day EMA is still looming, but moving above the bear flag is a positive development.

Of course it's Turnaround Tuesday, but also a pre-holiday reversal week, and there's an open gap in the flag, so maybe I shouldn't be so trusting?

 

[tsptalk]

This recent rally seems to have come out of nowhere, and that can happen around a major holiday, so can we trust it?

Take the 2022 Labor Day action for example...

 

[tsptalk]

Real break down in yields and the dollar, or pre-holiday reversal from the larger trend?

 

[JTH]

Thanks Tom

As much as the USD has lost, it's still better than the Polish Zloty. When inflation started spiking, I gained almost 40% more buying power, but Polish inflation was much stronger than the US, so it's been a mixed bag. Since the Sep 2022 USD/PLN peak I've lost 20% buying power, but it's still better (for me) than the pre-inflation days.

USD Vs. PLN

 

[tsptalk]

Wow. Yeah, inflation in Europe has been more sticky.

 

[weatherweenie]

To hear some talk, inflation is only a U.S. issue. Have they seen the interest rates that Turkey is dealing with?

Thanks Tom

As much as the USD has lost, it's still better than the Polish Zloty. When inflation started spiking, I gained almost 40% more buying power, but Polish inflation was much stronger than the US, so it's been a mixed bag. Since the Sep 2022 USD/PLN peak I've lost 20% buying power, but it's still better (for me) than the pre-inflation days.

USD Vs. PLN

 

[JTH]

To hear some talk, inflation is only a U.S. issue. Have they seen the interest rates that Turkey is dealing with?

Yea it's crazy, before I retired I wanted to take a vacation there, but wasn't allowed to visit. When I was there in 99 I think the rate was 1 USD to 400 something, but I don't remember carrying around a wheel barrow of cash.

 

[tsptalk]

Yields are down again this morning, but the dollar is looking perky. The S&P 500 seems to be making a beeline for the open gap during this 5-day rally (if today's gains hold.)

September, another tough month for stocks historically, starts tomorrow and the day prior to Labor Day weekend has a pretty good record, but we also get the jobs report tomorrow and that could make or break the day. The data has been good and we "probably" should not see anything inflationary, but you know how much they like to trick us.

 

[tsptalk]

Another Goldilocks jobs report for the stock market with new jobs beating estimates but the unemployment rate going up to keep the Fed at bay.

The S&P 500 is up about a half of a percent while it stretches toward the open gap.

The dollar and yield are trying to rally on the news both creating positive outside reversal days to start the day, although there's a lot of trading left in the day.

Bonds are getting hit hard this morning...

 

[tsptalk]

Small caps are outperforming bigly as the higher than expected unemployment rate may just be what keeps interest rates where they are, or even lower them, and small caps are impacted by rates much more than large caps. The interesting thing is that the 10-year T-note yield is moving higher today for some reason.

 

[tsptalk]

It's early and things could certainly flip around, but in the early going the small caps, which were very strong on Friday, are the laggards today giving back all of the 1% gain it had on Friday. Yet it's the same story as Friday with yields and the dollar up again. Post holiday reversal?

 

[tsptalk]

Yields and the dollar are down in early trading, and small caps are outperforming.

The S-fund's DWCPF is up about 0.3% this morning after yesterday's 1% sell off, and the catalyst is likely the dip in yields.

Oil is up fractionally and the market is going to have to start dealing with this new strength as it makes new highs for the year. At $87 it has come a long way in recent weeks but it is still well off the $120 - $130 we saw in 2022, but that is certainly a target judging by the charts.

High Yield Corporate Bonds are down again, and the Transports are flat after yesterday's steep losses and break down from the bear flag.

 

[tsptalk]

Yields and the dollar are down in early trading, and small caps are outperforming.

The S-fund's DWCPF is up about 0.3% this morning after yesterday's 1% sell off, and the catalyst is likely the dip in yields.

OK, then -- Everything flipped since that earlier post. Yields and the dollar are now up, and small caps rolled over.

 

[tsptalk]

The S&P 500 gapped open below the 50-day EMA but it is back above now as it has spent the morning trying to fill that gap.

The dollar is up again but yields are stalling after filling in that open gap near 4.3%. There is an open gap gap down near 4.2% that may be looking to get filled before it decides which way it eventually wants / needs to go.

 

[tsptalk]

With yields and the dollar trading lower this morning, it is giving a green light to traders, or maybe algorithms, that stocks can be bought.. Whether that holds into the close or not remains to be seen as we have seen several intraday reversals recently.

Some headlines include companies concerned about slower sales as inflation wanes. That's the problem with raising interest rates to curb inflation - it tends to lead to an economic slowdown. It's been over a year and we haven't seen any signs of a recession, but could one still be looming?

 

[tsptalk]

Stocks popped open higher but immediately started filling in the open gap - typical Monday gap action. The question is if it fills and resumes higher or fails like we saw on Friday?

The dollar is pulling back, possibly just filling in its open gap, but it is providing opportunity for some relief for stocks this morning. The 10-year yield is up this morning.

The S&P gapped back above its 20-day EMA but is currently near the lows of the morning as it fills the gap.

Small caps also gapped up and dumped and. after ramping above the 20 and 50-day EMA, is now back below them during the gap fill.

 

[tsptalk]

That pesky dollar is up again and testing a little overhead resistance that wasn't much of a match for it a week or so ago. This is keeping some pressure on stocks.

Yields are also up a bit as we head into tomorrow's CPI. There's an FOMC meeting next week but no rate changes are expected. however, the CPI and PPI this week could set the tone for their commentary, which can always move the market.

A little dip in stocks after Monday's big gains is no real concerns, and the bulls may turn up before the end of the day, but with the CPI looming before the opening bell tomorrow, I assume investors will be more tentative.

Oil is also up making new highs, and that is adding some pressure, although small caps are up this morning and leading the way, and that is interesting given that interest rate sensitive data coming out tomorrow.