tsptalk's Market Talk

[tsptalk]

Stocks are down moderately in early action this morning as yields and the dollar move up after the downgrade of the economy from Moody's.

Also, I'm still waiting to hear back from the TSP because I don't know if they processed IFT's on Friday. I will update the autotracker once I get a response.

 

[tsptalk]

The October CPI came in flat and that sent yields and the dollar tumbling.

This could be a sign of the economy weakening (as we witnessed with oil falling sharply over the last month) but that doesn't matter as lower interest rates is what investors hear with that data. It was all from the drop in oil prices.

 

[tsptalk]

Lower rates may be coming. Does that mean the S-fund can cut through resistance this easily?

The bull flag worked. The open gaps didn't. An inverse head and shoulders is now being tested.

 

[tsptalk]

Flashback to the CPI report in November of 2022. More choppiness and some modest gains followed, but later declined to fill the open gap.

 

[tsptalk]

Stocks are dismissing the pop in both yields and the dollar this morning and are up modestly to start the trading session.

The bulls have some momentum and the bears are underinvested so the setup may favor more dip buying.

The PPI report came in below estimates so we'd expect yields to move down, but retail sales were down causing the recession faction to lean toward playing for an economic slowdown.

That's the early action and stocks are overbought in the short and intermediate term so I'm guessing the bears will try to put some pressure on soon.

 

[JTH]

Flashback to the CPI report in November of 2022. More choppiness and some modest gains followed, but later declined to fill the open gap.

I remember that day, November 10th 2022. The index gaped up 2.97% and closed the day 5.54%. It was the 15th strongest day across 63-years (15,763 sessions) and the 9th strongest gap.

Stocks are dismissing the pop in both yields and the dollar this morning and are up modestly to start the trading session.

The bulls have some momentum and the bears are underinvested so the setup may favor more dip buying.

The PPI report came in below estimates so we'd expect yields to move down, but retail sales were down causing the recession faction to lean toward playing for an economic slowdown.

That's the early action and stocks are overbought in the short and intermediate term so I'm guessing the bears will try to put some pressure on soon.

Although I'm not a bear, I'm definitely underinvested, all my short-term trades are faded. I wonder how many of us will chase this rally....

 

[tsptalk]

Yields and the dollar are trying to give back the gains they made yesterday, and despite some red futures, we are seeing modest buying in stocks again, although it's mixed. Small caps and the Transports are down to start the day, and the Nasdaq has a good reason to pull back with the selling of Cisco and Palo-Alto, the dip buyers are not missing an opportunity.

The price of oil is tanking again - good for consumers, but another sign of a play on possible economic weakness. Jim Cramer mentioned that this would be a good time for the president to start refilling the oil reserves we drained when prices were soaring.

The VIX has a 13 handle (13.77) and the last couple of moves to 13 led to market peaks. 13 is not very low historically, but it was during the bearish market action over the last couple of years. A move below 13 may tell us that it is different this time, and the rally may be for real.

 

[tsptalk]

Another choppy, mixed , flat start to the day for stocks as the digestion of the recent rally continues.

I'm seeing the 10-year yield up, after opening lower. The dollar is down, oil is up sharply 2.5%, and small caps are bouncing back from yesterday's sell off.

It's pretty quiet heading into the weekend and then the holiday shorten week. Most of the pressing issues like the inflation reports, the jobs report, the Fed, and earnings, are behind us so the market may be getting short of catalysts, although Nvidia is a big one that reports after the bell next Tuesday.

This kind of quiet action normally favors the bulls but it also leaves the market vulnerable to unexpected headlines and can swing widely on low volume.

 

[tsptalk]

Huge test for the small caps of the Russell 2000!

The head and shoulders pattern (purple) broke down on the Russell 2000 ETF back in early September, and eventually bottomed in late October. In the process it has been creating an inverted head and shoulders pattern (green) and now that is testing the old broken neckline, as well as the 200-day EMA and simple average.

 

[tsptalk]

Stocks are pulling back early this morning with no major catalyst except maybe some weaker than expected retail earnings. Yields and the dollar are down and this would normally be helping the market, but we have the old pre-holiday reversal possibly in play here.

Here's the chart of the 10-year Treasury yield and the F-fund (BND) as they approach some meaningful moving averages that may support or restrict them, depending on the chart, and perhaps trigger some backing and filling on each. What something like that would do to the stock market is not certain, but the trend has been for stocks to move counter to the 10-year, and with the BND chart.

 

[tsptalk]

Reminder: Nvidia reports after the bell today. This stock has a propensity to move big after the release - either up or down. It made an all-time closing high yesterday and is up 25% in the last three weeks.

 

[tsptalk]

The 10-year yield is currently up, and the dollar is rallying, but stocks are in a holiday mood today, despite some selling in Nvdia. It's early in the trading day, but so much for the pre-holiday reversal.

One noticeable development is seeing the VIX (Volatility Index) fall below 13 this morning. It has been a support level this year, and it's near multi-year lows.

 

[tsptalk]

A pop in yields this morning. Looks a test of the neckline of a broken head and shoulders pattern.

The S&P 500 is flat but the small caps don't seem to mind, and the I-fund is leading with the dollar down 0.4% this morning.

 

[tsptalk]

Quiet start to the new week with many indices near the flat line.

The S&P 500 can't seem to get above the old open gap, but it is not backing down yet either. The Russell 2000 small caps are lagging but the S-fund is holding near flat.

Meanwhile yields are pulling back and filling in that odd gap up on Friday, that broke out above the falling wedge.

The dollar is flat offering no catalyst either way. Oil is up slightly, but the chart still looks bearish and lower prices look probable.

 

[tsptalk]

Stocks are down modestly again, but once again the bears are not pouncing on the bulls' lack of enthusiasm.

Yields and the dollar are down, but that's not helping, or maybe it is and stocks would be down more?

Consumer Confidence came in a tick above estimates but the prior readings were revised lower and to a level not seen in almost 3 years.

Gold has been flying lately and it is up again. Oil is also up with that weak dollar helping both.

 

[JTH]

Stocks are down modestly again, but once again the bears are not pouncing on the bulls' lack of enthusiasm.

Yields and the dollar are down, but that's not helping, or maybe it is and stocks would be down more?

Consumer Confidence came in a tick above estimates but the prior readings were revised lower and to a level not seen in almost 3 years.

Gold has been flying lately and it is up again. Oil is also up with that weak dollar helping both.

Thanks Tom, since it didn't appear to happen this November, I'm wondering when/if we'll start to see them front-run some tax lost harvesting, what say you?

 

[tsptalk]

Thanks Tom, since it didn't appear to happen this November, I'm wondering when/if we'll start to see them front-run some tax lost harvesting, what say you?

Just speculation, but I wonder how much tax selling there will actually be with stocks up so much this year? With profits, people would usually wait until January to sell to postpone taxes for another year.

But yes, I'd say early to mid-December is the season for tax selling the losers in accounts, rather than toward the end of the month.

 

[tsptalk]

Yields are down and the dollar is flat following a stronger than expected Q3 GDP report?

The question market is there because when the economy is strong, yields would tend to go higher, but the 10-year is down sharply to start the day again.

Of course Q3 GDP is rear-view mirror data as we are about to enter the 2nd month of Q4, so the market is more likely looking outward rather than behind. The yield is acting as if it is expecting weakness going forward - in the economy, not necessarily stocks, and clearly the market is reacting to something this morning.

The chart formations have been stretched but there has been a slight consolidation since that gap up. Technically the S-fund is still in an F-flag, which tend to break down, but right now it is creating another breakout above that 1765 area. So, breakout, or a fake out to suck in the reluctant buyers?

 

[tsptalk]

An 8% jump in Salesforce Inc this morning has the Dow up a couple of hundred points but the broader indices are mostly flat and mixed to start the day.

The PCE data report was inline with estimates and the futures were up after its release, but that's old news at this point as the the recent rally, and the gains this year in general, may have priced in the fact that inflation has calmed down.

And actually yields and the dollar are starting the day higher despite the tepid inflation report. Whether this is an end of month phenomenon or a reaction. Whether that is due to the record drop in pending home sales, I don't know, but the headlines say it's worse than during the financial crisis.

It's the final day of the month and what a month it has been. What will December bring? Early December is not historically not as strong as the end of the month, but check out JTH's recent post regarding these seasonal tendencies here... JTH's Account Talk

 

[tsptalk]

Yields are down, the dollar is flat and the major stock indices are mixed.

The ISM Manufacturing Index came in slightly lower than expected and that may be sending yields lower, and the economically sensitive Transports and interest rate sensitive smalls caps are leading this morning with the Transportation Index attempting to breakout of its inverted head and shoulder pattern, and small caps testing the top of the F-flag's channel again.