tsptalk's Market Talk

[tsptalk]

This could easily change by the close, but that spinning top formation, should it hold, would not be the best sign for the S&P. But yes, it could end up closing near the highs and be a trend changer, we'll see.

 

[tsptalk]

Stocks gapped up on Monday morning, following through on Fridays jobs report triggered rally. Mom and pop watched the news this weekend and saw stocks rallying the last couple of days so it could be a little FOMO after some pullback selling in April.

The 10-year yield is up slightly, not enough to matter, but enough to have support holding at the 50-day average and the rising support line.

Small caps are leading despite the higher yields and while it could be the draw from the overhead open gap, it's also impressive because it completely negated the negative reversal on Friday, and it's trading above its bear flag again.

The close matters so it's too early to say anything one way or the other, especially on a Monday morning, but so far so good for the bulls.

One chart to keep an eye on is the market leading Dow Transportation Index. It's up again but it continues to struggle to get back above its 200-day average.

It's a quiet week on the economic data front. Gold, oil, and bitcoin are all up to start the week.

 

[tsptalk]

The S&P 500 futures are up slightly before the opening bell, while the Nasdaq is flat. Yields start the day on the downside but testing key support and the 50-day EMA.

Let's see how the market behaves based on this situation.

 

[tsptalk]

Stocks are up modestly in the first hour of trading as yields move lower, but test support as noted in the previous post. The dollar is flat.

The S&P 500 has had a great run off the early May low and may have a little bit of a headwind of resistance as the the short-term indicators get a little overbought.

Any signs of the bear flag are mostly gone but as I mentioned in today's commentary, the 2023 comparison ran out of steam right about here (after 11 days.)

 

[FAAM]

Hmm... I notice a W-formation there in the TNX daily chart you posted, in March, that ended going way up as those tend to indicate; yet that went right into a M-formation for April to now... hope that doesn't continue down through the 50EMA.

 

[tsptalk]

Yeah, that was a nice successful retest of the lows on TNX. Now the lines in the sand are drawn.

 

[tsptalk]

We're seeing a little weakness in stocks this morning as yields and the dollar are both up, and technically bouncing off of key support or, in the case of the dollar, getting back above support it had fallen below.

Small caps are lagging, as we have come to expect when yields are moving higher, so the question is, how much support is in that TNX chart and can it continue to bounce off of it?

We will get some Federal Reserve commentary Wednesday as several members are expected to give remarks throughout the day, which will of course impact the market.

Oil, gold, and bitcoin are all down this morning.

Japan was down sharply last night, and Europe is mostly green. The EFA (I-fund) is down slightly, currently as much as the UUP is up, 0.14%.

 

[tsptalk]

It's another slow day of trading with yields slightly higher as the 10-year yield continues to push off of rising support and the 50-day EMA. The S&P is basically flat but gaining steam, and small caps are having a good start, as is the I-fund with the dollar lower slightly this morning.

We see a nice move up in the S-fund chart this morning although it could be the lure of the open gap from yesterday. There's still some resistance at the top of that gap and above.

Jobless claims totaled a seasonally adjusted 231,000 for the week ending on May 4, up 22,000 from the week before.
It was the highest claims number since late August 2023.

Weekly jobless claims jump to 231,000, the highest since August

 

[tsptalk]

Another quiet, dull day for stocks, and as they say, never short a dull market. We're in this pocket of an economic data void and there's nothing scaring away investors, yet trading volume remains low so there's no rush to buy. When the constant pension fund type money flows into the market it gives stocks a breeze at their back, and for now, no headwind.

We did see yields turn higher this morning after opening lower, and the dollar is also higher, and that took stocks off their morning highs. Neither have been an issue in the last couple of weeks but if that support continues to hold and they start heading to recent highs, it could be a problem.

The S-fund is down this morning after a strong start, and it looks directly correlated to the move up in yields.

 

[tsptalk]

Some weakness in yields and the dollar has stocks up to start the new week, particularly small caps which badly underperformed on Friday. Despite red numbers in Japan and most of the larger markets in Europe this morning, the EFA is up with the dollar down modestly.

The market looks forward to this week's PPI and CPI reports as the 10-year yield continues to dance along support.

The VIX has a bullish bias earlier in the week, particularly on Mondays, compared to a Friday, but this morning 6.7% spike up in the VIX may be investors preparing for what's coming with those inflationary reports this week.

 

[tsptalk]

Stocks are up modestly this morning after surviving a hot April PPI report in the futures market.

Yields shot up initially on the report, and the S&P futures fell, but everything flipped shortly after. Perhaps it was the because they revised the March number down a tick?

Key support is being tested once again but the close will be key because there is an outside day brewing on the chart.

This is the 1 minute chart as yields spiked on the PPI release, then tanked. I'm not sure why exactly.

Also, Gamestop is up to its old tricks again. Should be fun to watch.

 

[weatherweenie]

S fund is up yugely.

 

[tsptalk]

Yes, on a day inflation data was on the hot side. Yet yields are down and small caps are up. Interesting action.

 

[quabit]

We are back in a market where it will take the likes of a pandemic to affect it. Good new market goes up, bad news market goes up, earnings are good market goes up, earnings are bad market goes up. Inflation is hot and rates will stay elevated longer market goes up, inflation tic'd down market goes up. I always hated this type of market because I'm a watch for the other shoe to drop type of person and miss the rise. Should have been a buy and holder from the start but that's not my nature and I am way too cautious for my own good. Something I have had to plan for as I get closer to retirement.

 

[tsptalk]

Agree. Tough to trade this type of market. You either have to chase or be patient.

 

[tsptalk]

If we glean anything out of the last week it is that the stocks market wants (or wanted) to go higher. Strong economic data, weak economic data, it didn't seem to matter.

I suppose the thread here is that yields and the dollar have been trending lower. We did see a knee jerk drop in yields and the dollar this morning after the CPI report, and the 10-year yield chart is doing the opposite of what I talked about in today's commentary That is, that flag formations had been breaking in the opposite direction of what a flag formation might suggest. This morning the bear flag did break down as it is supposed to. But they (10-year and the dollar) are both recovering off that immediate reaction.

Same with stocks as small caps gapped up at the open but the DWCPF is already filling the gap. That's not necessarily a bad thing and it could resume higher once the gap is filled.

It's a market that you've either had to chase, or be patient.

 

[tsptalk]

Yields were down at the open but have battled back and the 10-year is now flat. The dollar is up 0.25% so this combination is putting some early pressure on the S and I funds. The S&P 500 (C-fund) is holding up with a modest gain and the Dow is getting a boost from Wal-Mart which gap up after posting strong earnings, and that pushed the Dow over 40,000 for the first time ever, but it's dancing around that number right now.

I posted this chart in today's commentary showing that the rally could be running into some long term resistance so it will be interesting to see if the bullish breakout setup on the daily chart can indeed create a new leg higher.

The strength in the dollar has gold down this morning, but bitcoin and oil are fighting the dollar's roadblock and are up modestly in early trading.

Japan was up big last night and Europe is mixed.

 

[tsptalk]

It's a quiet options expiration Friday with stocks up slightly despite a move higher in yields and the dollar. The Dow is up but still about 90-points off 40K, which it touched yesterday. There's not much going on in the headlines, unless you're enjoying the ups and downs of the meme stocks.

Gold and bitcoin are having good days, and oil is up a few ticks.

Japan and European markets are a sea of red today.

 

[JTH]

Even CPI-Day Volume was below its 50-MA, I'm wondering if we need a stronger catalyst to push us higher.

Last year's post Memorial Day gave us a 14-Session 5.78% rally.

 

[tsptalk]

I think next week will be very telling. There are certain times during the year where stocks tend to reverse course. Before / after a holiday weekend. At the start of a new month. And after an options expiration week.

This very slow action today tells me there's big money out there trying to keep the market from making any big moves until the expiration at the close. Then next week we have a setup for a bigger move. Which direction? If the expiration reversal tendency works, then down. Otherwise, another leg higher.

So, to go along with your holiday data, maybe some weakness into Memorial Day weekend, and then a rally? :dunno: