tsptalk's Market Talk

[tsptalk]

The market is trying to process this morning's CPI report which came is slightly hotter than estimates, but perhaps not as bad as was concerned, or the "whisper number." The dollar and yield are up slightly, but the 10-year yield has already backed off of a morning spike.

Oil is flat to slightly lower at 88.77 , and as that approaches $90 it could become the more immediate focus for the stock market with the Fed now unlikely to raise rates at next week's meeting, and the chances of another 0.25% hike in November actually went down a bit to 38% from the 41% chance it was yesterday, and 44% last week.

So, the bears didn't get what they expected but the bulls right now are a little tentative. If oil can stabilize the bulls may wake up again but if we start seeing prices north of $90, the bears will pounce.

The S-fund chart is looking questionable and probably needs to hold the Sep 7 low, otherwise 1750 would be next.

 

[tsptalk]

A negative outside reversal day is developing on the 10-year yield, and a positive outside reversal is showing up on the Transports chart.

 

[tsptalk]

Stocks are pulling back from their gap up opening today, but still solidly green. Yields and the dollar are up after a hotter than expected CPI, so this action seems interesting, and it is a quadruple expiration week so things don't always make sense.

High Yield Corporate bonds suggests the credit market is strong. Really? That's what the HYG chart is trying to tell us.

The S&P peaked this morning when it filled the small open gap from after Labor Day. Is that big gap even possible?

Small caps are leading today and it's a much more broader rally so far compared to yesterday. The Transports are up, but well off their opening highs as it tries to fill its open gap as well.

Oh, and ...

 

[tsptalk]

The recent track record of Friday quadruple witching expiration day in September has been pretty bad, and next week (post Sep expiration week) has a negative bias, and a poor one at that, but sometimes the Monday of post expiration Sep is actually up before a decline into the rest of the week. It seems to feed off of the the Friday before (today). If they're pushing stocks down on Friday expiration day, they are often up the next Monday, and vice versa.

Yields started the day up a bit and the dollar slightly lower. Oil is flat but this morning's losses seem to be expiration related after Thursday surprising gains following the CPI and PPI data.

The market feels like it wants to go up with buying the bad news, but some of the charts look troubling.

This looks OK.

This (S-fund), not as much...

 

[tsptalk]

The VIX held again at those prior lows. However, if it knocks enough on that door, someone will eventually open it.

 

[tsptalk]

The VIX tends to be stronger on Mondays than toward the end of the week, and this morning we see a breakout to the upside of the descending resistance, while the wall of support under 13 continues to hold.

 

[tsptalk]

Yields are up again, while the dollar is down a bit, oil is also up over $92 a barrel, yet we are seeing some strength in stocks.

Small caps are lagging a bit this morning, and the I-fund is catching up to Friday's losses after a generous pricing that day.

It's a slow day, this post options week that is more of a hangover to Friday's expiration day.

Mondays have been positive for months now. Today would be the 11th positive Monday in a row. Only a negative Tuesday after a Labor Day Monday holiday was negative during that stretch. It's trying again today. Unfortunately for the bulls, it hasn't been going as well after Mondays.

 

[tsptalk]

As goes Apple...

What's going on here -- besides a head and shoulders pattern?

 

[JTH]

As goes Apple...

What's going on here -- besides a head and shoulders pattern?

This peaked my interest today.

At 30:04

“Seasonally, if you go back and look at Apple relative to the S&P 500, you’ll see that seasonally it outperforms from Jan to the end of Aug. Sep to the end of the year it’s just a normal behaving stock. It really doesn't like the 4th quarter of the year. ”

Charting Forward: Q3 Market Outlook

 

[tsptalk]

Yeah, it looks more like the small caps charts than the S&P 500.

 

[tsptalk]

It got as high as 93.68 this morning before backing down below 93 again.

 

[tsptalk]

The opening action is giving the bulls something to chew on in front of this afternoon's Fed policy state and presser.

Yields are down, the dollar is down, the price of oil is down, European stocks are up. What's not to like, but you know how that can go? Those can change on a dime and of course everyone will forget about that when Jerome Powell steps in front of the microphone.

The "kangaroo tail" reversal yesterday sets up a possible bounce, as we see below. Not all worked and the Fed may have something to say about whether yesterday's will work.

 

[nasa1974]

Could use a little lovin in the "S" fund.

 

[nasa1974]

No lovin, just a smack in the face. It was looking good until it wasn't.

 

[tsptalk]

In today's commentary I talked about possible tops (whether temporary or longer) on the 10-year yield and the dollar. Nope! Both broke out to new highs this morning.

I also mentioned the head and shoulders on the S&P 500 and here it is testing the important neckline again already this morning. One final swoosh was likely either way, and it wouldn't be too unusual for that post Fed swoosh to reverse pretty quickly. Not always as this chart showed that this year it was mostly Fed driven rallies that failed quickly, although the one in March was an exception.

So, while it's very dangerous to try to catch a falling knife, an overreaction to the downside could trigger some kind of oversold reversal to the upside later today, or in the coming days. although we'd probably need to see yields and the dollar calm down for that to happen.

 

[tsptalk]

This is not a great looing chart with the head and shoulders pattern forming in a downtrend, but Apple is actually flat this morning. Maybe some bargaining hunting while investors are selling the bloated stuff?

 

[tsptalk]

It's interesting that stocks started to come off their morning highs, as oil fell from over $91 to below $90.

Yields are down trying to fill a gap, and the dollar is up and remaining relentless.

 

[tsptalk]

This is good to see, although it won't be long before the talk is - falling oil prices trigger recession concerns.

 

[tsptalk]

Stocks struggling again this Monday morning. The indices are oversold but the pressure of higher yields again in early trading, a stronger dollar, and High Yield Corp Bonds possibly breaking down, is weighing on the market in early trading.

Oil is down slightly, but perhaps snot enough t make an impact on stocks.

 

[tsptalk]

Yields are down, but off their lows, and the dollar is up. The light volume rally on Monday - the 12th positive Monday in a row, is being followed up by some serious selling to start the day.

It could be the puking phase of this pullback / correction, or we could end up with a Turnaround Tuesday by the close. Trading volume may determine that.

The Fed's hawkish outlook and their continuous reduction of the balance sheet sets an unfavorable tone to the market, and those "sticky pants" buy and holders may be getting fidgety. You know the buy and holders who hold until things get too scary? They usually end up selling near the lows, but no one really knows where the lows will be.

Fear in the market is getting higher but not at extremes yet according to CNN's Fear and Greed Index.