tsptalk's Market Talk

[tsptalk]

The bleeding continues on Tuesday morning as the market consumes bank earnings. The S&P (C) is near flat but no bounce off the recent lows yet as yields and the dollar move higher again today.

The S and I-funds are taking the biggest hits and the charts are breaking support levels and testing the next line in the sand.

Bonds are down again as yields move up as the 10-year nearly touched 4.7% (4.696%).

Oil is down slightly and hovering near $85 a barrel, gold is up while silver and bitcoin are down.

 

[tsptalk]

After a positive open, stocks have flattened out this morning despite yields and the dollar dipping. The pullback environment continues but it is getting closer to a point where it could move from a healthy dip to more of a corrective action and the answer may be whether yields stabilize or not. Is yesterday's 4.7% the new ceiling on the 10-year, or is it going higher?

Oil and gold are flat while bitcoin continues it's pullback from its all time highs.

Small caps are lagging but it's pretty flat out there right now.

 

[tsptalk]

It looks like it will be another choppy session as the opening rally failed, turned into losses, then pushed back to positive. In the short-term, things may be getting oversold. The question is, how aggressively will the bears sell a relief rally? Or will we see a V bottom and wonder what all the fuss was about? Both are very plausible outcomes from a 5% pullback.

Yields and the dollar are up this morning but both have good sized open gaps below that should draw attention in the near future. Both trends are up however, so any fill could easily be bought.

Israel has said they are refraining from an immediate counter attack on Iran, helping push the price of oil lower yesterday and it's fairly flat so far this morning as it tests some rising support.

The S&P has some room to fall with a large open gap and important moving averages about 1% below yesterday's close.

It's options expiration week so volatility could remain sticky though Friday.

 

[tsptalk]

Last night when the Israel / Iran news was coming out, the S&P 500 futures were down 52-points (last I checked last night). The S&P opened flat so something eased the situation. But now the market may have to digest that action in the futures market a little. If that -52 low holds on the futures chart it could be a good sign and a good formation on the chart.

It is an expiration Friday so the big options traders and money managers could be jockeying for position and be trying to hit certain strike prices to take profits or avoid losses on options that expire today so there could be a lot of whipping around.

Oil, gold and bitcoin are up. Japan was down sharply last night on the Middle East fighting, and Europe is mixed but leaning lower.

 

[tsptalk]

 

[tsptalk]

Another Monday morning gap up. Last week's didn't hold up so well. Here we go...

Some key earnings this week:

Tuesday - Tesla, UPS, Visa

Wednesday - Meta, IBM, Boeing

Thursday - Microsoft, Alphabet (GOOG), Intel

 

[tsptalk]

More encouraging action this morning and a modest decline in yields and the dollar are helping small caps lead this to start the day.

However the next 20+ points on DWCPF (S-fund) may be tougher than the 60 we've already saw last Friday's low.

The 10-year yield and the dollar are both at the bottom of their recent consolidation ranges, but both have open gaps below the range.

UPS reported earnings this morning helping the Transports to a 1.2% gain, and Tesla reports after the bell. They, and big tech in general, have been in a tailspin and will need an optimistic report to stop the bleeding. Big tech earnings could make or break this relief rally. 6 of the 7 Mag 7 report this week or next. Nvidia doesn't report until May 22.

 

[tsptalk]

Stocks opened mostly higher with the indices gapping up and coming back to fill in those caps already. The 2-day rebound is pausing a bit this morning as yields moved higher and back near the top of the range on the 10-year yield.

Tesla is up 12% helping the Nasdaq lead on the upside while the Dow is down modestly after a 4 day win streak.

Oil, gold and bitcoin are all down this morning.

Japan was up over 2% last night and Europe is mixed this morning.

Meta and IBM report earnings after the bell, and the PCE Report looms Friday morning and investors understand that this inflation data can make or break the relief rally.

 

[tsptalk]

An ugly open after Meta earnings last night and the miss on GDP this morning, which was a double whammy with growth slowing yet consumer expenditures up the most in a year, which sounds good but it's inflationary and it's pushing the 10-year yields up to a new high for the year.

The stock market doesn't appreciate the low growth, high inflation report, and Meta's issues with AI, so we are seeing a shake out and maybe a test of the recent lows.

I have mentioned that "stealth gap" that is there between Monday's close and Tuesday's low, but that is now filled (blue box) and now the main open gap is the one created this morning in red.

So we either have a shake out, gap fill, and a test of the lows, or the pullback is going to resume and the relief rally is over. Place your bets!

 

[tsptalk]

Why are yields up on the weak GDP? I don't know, maybe it just wanted to try to fill that open gap before coming down? :dunno:

 

[tsptalk]

Stocks gapped up this morning on the Microsoft / Alphabet earnings released after the bell last night. The PCE Prices / Spending reports were a little hot but yields are down after the data.

The S&P 500 (C-fund) and the EFA (I-fund) both gapped up above their 50-day EMAs but the DWCPF (small caps / S-fund), while up, is still stuck below its 50-day average. The Nasdaq (not shown) is up almost 2% with the Mag 7 stocks leading.

The dollar is up sharply making the gain in the EFA more impressive.

Oil and gold are up while bitcoin is down.

 

[tsptalk]

Stocks open higher to start a very busy week for the financial markets, and today may be the calm before the storm. As I talk about in today's daily commentary, more Mag 7 earnings, a Fed meeting, and the April jobs report highlight a busy week for the stock market, which reignited last week after the steep pullback.

The S&P 500 gapped up above some descending resistance and there is a little more room before the next layer of resistance is tested.

The 10-year yield is down this morning but still hanging around the recent highs. It's down to 4.63%. 4.77% would fill an overhead open gap from November.

Amazon reports after the bell tomorrow.

Oil and bitcoin are down, and gold just turned positive.

Japan's Nikkei was up big last night, and Europe is mixed this morning.

 

[tsptalk]

Sorry. I was busy all morning with tech issues and personal. (My dog isn't doing well. )

Yields are up on more wage inflation data, nearing the recent high. Saw this post in another thread about the 10-year yield. Nothing surprising, but it's what everyone is watching...

This is the level where the 10-year Treasury yield becomes a ‘clear problem’ for stocks, Goldman study shows.

... at what point will rising yields spoil stocks’ 2024 rally?

The answer is 5% on the 10-year Treasury yield, according to Goldman Sachs. In a new 19-page paper using market data since the 1980s, the Wall Street firm said when that threshold is reached, the correlation between bond yields and stocks turns negative.

“While there is no ‘magic number’, historically bond yields at around 5% is when higher yields become a clear problem for equities — that is the point where the correlation with bond yields is no longer decisively positive,” wrote a team of Goldman strategists led by Peter Oppenheimer, chief global equity strategist.

Where the 10-year yield is a '''clear problem''' for stocks, Goldman says

 

[tsptalk]

Yields and the dollar are easing lower so far this morning and stocks are mixed. The Dow and small caps are up, while the S&P and Nasdaq are down.

We got a JOLTS report a little while ago and it was the lowest reading since some time in 2021. That tells us that there are not a lot of job opening, meaning the jobs market is pretty strong. The ADP employment report also came in stronger than expected. More on the JOLTS Report.

This may not be what the Fed wants to hear but since today is day two of their 2day meeting, it may not come into play - or they already knew the data and have considered it.

It's the calm before the 2PM ET storm when we get the Fed's new policy statement. I'm not sure what yesterday's sell off was all about as it came before this week's busy news schedule. Perhaps a little "sell the rumor" action? Does that mean we'll see a "buy the news" reaction today?

I'm not calling for that but I was a little surprised by yesterday's selling and the late plunge into the close. Is something brewing that we don't know about?

Oil is down, gold is up, and bitcoin is down sharply.

Japan was down last night and European markets are showing a lot of red.

 

[JTH]

I'm not calling for that but I was a little surprised by yesterday's selling and the late plunge into the close. Is something brewing that we don't know about

Not sure what's going on either, it's like the markets knew they were gonna finish the month in red, so they just gave up. There were some big hits in the weighted Top-10 yesterday, so maybe it's a large cap rotation or we are pricing in the unexpected.

On Tuesday's close.

-3.21% Microsoft
-1.83% Apple
-1.54% Nvidea
-3.29% Amazon
-2.03% Google

Adding to this, the Top-50 ETF XLG lost -1.60% which is nearly identical to SPX, and every sector closed down, so it was some pretty broad-based selling. :suspicious:

 

[tsptalk]

We saw some backing and filling of yesterday's negative reversal candlestick to start the day, but that failed early to fill any gaps. So far stocks have stabilized within yesterday's range, but there's a long day of trading left with Apple reporting after the bell, and that range is wide on the S&P 500, from 5013 to 5096.

The 10-year yield is up again but it remains in its 3-week consolidation range. Small caps are outperforming slightly despite yields moving up, but if this breaks out above the recent highs, I would guess small caps start to underperform again.

The dollar is down so the I-fund is outperforming this morning.

It (UUP) remains in its range as well and looks like it wants to make new highs.

Oil is flat, gold is down, and bitcoin is up.

The April jobs report will be released before the opening bell tomorrow.

 

[tsptalk]

Bear flag or "V" bottom? Apple after the bell and the jobs report tomorrow may decide...

It's funny to watch all the analysts on CNBC say how much Apple is hated and that they expect an upside surprise. All of them. So is everyone bearish on Apple, or really bullish? :scratchchin:

 

[tsptalk]

The tricky part for stocks tomorrow could be that Apple could keep the Dow, S&P 500, and Nasdaq happy being that it is such a big part of those indices. But we'll see what the equal weight S&P (RSP), the Transports, and the small caps do, especially if the jobs report causes yields to move up.

If Apple doesn't keep keep the indices positive (i.e. bad jobs report, etc.) that would be very bad news for stocks.

 

[tsptalk]

OK, so the jobs report came in weak, 175K vs. 240K expected - something the stock market needed to see today to keep yields from breaking out.

The S&P futures did jump up about 30-points from where they were, which was already up 20 after Apple reported. Looks like the wide swings are going to continue. If these gains hold today the pullback could be over, otherwise it would be another major fake out.

More on the jobs report: Jobs report April 2024: U.S. job growth totaled 175,000 in April

 

[tsptalk]

The bullish flag I have been talking about on the 10-year yield chart was basically negated with today's selling, but it did come down to hit support and has been bouncing off that. So the big question is if that becomes a firm low or not, which would make a higher low so I'm not sure the upward trend is broken yet.

The gap up open and rally in the S&P also doesn't break the bear flag, but it sure is getting close.

They'll probably leaving us hanging into the weekend on that one. The bulls are in control this morning. but if it can close above 5150, the bulls case gets even more intriguing.

The VIX is flirting with another attempted break down.