tsptalk's Market Talk

[tsptalk]

We have yields and especially the dollar up this morning, putting some pressure on stocks and commodities. The Dow is up again while the broader indices struggle, although the Russell 2000 just ticked positive. The negative reversal in Nvidia is leading the show.

It's a major expiration day so we could see some whippy action late, but it will be a new ballgame next week once this passes. What that ballgame will be, who knows since not all indices have been moving in the same direction lately. It seems a little quiet out there and even the VIX is flat on this normally unpredictable expiration day.

We have gold and other metals all down this morning while oil is up moderately. Most of the cryptos are down again.

 

[tsptalk]

After a sluggish open, stocks gained some traction in the first hour of trading. Yields are flat but the dollar is down and that's helping the I-fund lead so far this morning.

Small caps are also doing well while the S&P is up but lagging because of weakness in the tech sector with Nvidia down 3% in early trading.

Oil, gold, silver are all up with the dollar down, but the cryptos remain in a down trending funk.

 

[tsptalk]

I suppose it is a good thing that we know what the Fed members are thinking, but did the market need to know that Fed Governor Bowman is ready to raise rates if needed?

Yields are popping on that comment, although the 10-year yield is still in the recent range below the 200-day EMA.

 

[tsptalk]

Every break up candlestick has been getting retraced lately on the S-fund chart (dwcpf). Friday's was a little different in that it was a reversal candlestick, but will it get retraced, or will this morning's gap fill hold it this time?

 

[nasa1974]

Yeah, "S" fund stinks today.

 

[tsptalk]

More mixed action today with Nvidia up 1.4% lifting the Nasdaq. The S&P is down but basically flat right now. Small caps are down. The Transports are up big thanks to Fed Ex and the chart is making another attempt at breaking out above descending resistance.

Yields are up and that's even with new homes sales missing estimates badly this morning. The 10-year is up above that 200-day EMA, but I would say the bear flag is still intact.

 

[tsptalk]

Another day, another situation. Yields were up when they opened but have since fallen sharply after the initial jobless claims and Q3 GDP numbers. In my view, neither suggested yields should go lower so I will put this in the category of the bear flag just filling out, very similar to the fake out in the bear flag in May.

The dollar is also down, helping stock prices move slightly higher to start the day.

Nvidia was down after hours last night after Micron posted earnings, but it's battling back this morning. Is that a red bear flag or just a "V" bottom off the 20-day EMA?

Gold, oil, and crypto are all up this morning with the help of that weak dollar.

We get inflation data tomorrow in the PCE report, so buckle up.

 

[tsptalk]

Stocks are up this morning after a couple of benign inflation reports. The 10-year yield is down just slightly and rebounded off the lows after filling in a small gap. It continues to hold above the 200-day EMA while a bear flag elongates.

The S&P 500 (C) moved above 5500 and is making new all time highs, as is the Nasdaq. Small caps (S) were leading early but the large caps just surged to catch them. The I-fund is up but lagging the US funds.

Gold is up while oil and bitcoin are lower.

 

[tsptalk]

I know this is boring stuff, but I have been smelling a rat here. We had a bear flag trading below the 200-day EMA for almost two weeks, but the 10-year yield wouldn't break down. Now today we get good news on the inflation front, and weaker GDP estimates from the Atlanta Fed, yet yields are moving up sharply? The direction of yields vs the daily news has been counter to what I'd expect recently. There's still resistance in the area but I can't explain why yields are moving up - technically or fundamentally. Maybe I missed a headline? Personal income was a up little more than expected, which may have something to do with it, but personal spending was down.

And of course stocks are well off their highs with yields moving up.

 

[JTH]

I know this is boring stuff, but I have been smelling a rat here. We had a bear flag trading below the 200-day EMA for almost two weeks, but the 10-year yield wouldn't break down. Now today we get good news on the inflation front, and weaker GDP estimates from the Atlanta Fed, yet yields are moving up sharply? The direction of yields vs the daily news has been counter to what I'd expect recently. There's still resistance in the area but I can't explain why yields are moving up - technically or fundamentally. Maybe I missed a headline? Personal income was a up little more than expected, which may have something to do with it, but personal spending was down.

And of course stocks are well off their highs with yields moving up.

Yea bonds are outside my wheelhouse, every time I try to dig into it, I get dumber :banghead:

Anyhow... "The bank reported inflows into a tool designed to set a floor underneath short-term interest rates stood at $664.6 billion, the highest level since $680 billion seen on Jan. 10."

Even knowing that, I still don't know what it means or how it translates to prices.

 

[tsptalk]

End of quarter shenanigans?

 

[tsptalk]

I can't explain why yields are moving up - technically or fundamentally. Maybe I missed a headline?

Anyhow... "The bank reported inflows into a tool designed to set a floor underneath short-term interest rates stood at $664.6 billion, the highest level since $680 billion seen on Jan. 10."

Even knowing that, I still don't know what it means or how it translates to prices.

Mike Santoli on CNBC mentioned it being confusing (and if he doesn't know...) but said it is possibly end of quarter window dressing from money managers - getting certain things off their books and others on.

 

[tsptalk]

Pre-holiday reversals are in play this week. This is typically a bullish week for stocks with trading volume drying up as traders head off to their holiday destinations.

I'm not sure why yields continue to plow higher - is it part of the pre-holiday reversal phenomenon?

The dollar is playing along. It's trending higher but down today.

Stocks are a little whippy this morning as gains turned to losses, and back to gains again.

Oil is up, gold is down, and bitcoin is trying to rebound from its recent correction.

 

[JTH]

I think we have a half-day on Wednesday, I'll be curious to see how low volume is this week.

 

[tsptalk]

Yes, half day of trading on Wednesday. NYSE closes at 1 PM ET, I believe.

 

[tsptalk]

I'm still not hearing a good reason, now that the end of quarter window dressing is over, why the 10-year Treasury yield is jumping?

Technical analysis is the best explanation as the BND bond ETF needed to fill in some open gaps. (Bond prices move counter to yields.)

71.4 and 71.0 and 70.8 look like possible downside targets that "could" hold.

 

[TommyIV]

I'm still not hearing a good reason, now that the end of quarter window dressing is over, why the 10-year Treasury yield is jumping?

The Wall Street Journal seems to think it's because of election expectations. As if the latest debate drama has the market thinking Republicans have a high chance of taking over congress and the executive branch:

A basic rule of thumb for investors is that deficits are always likely to be larger if either Democrats or Republicans control both chambers of the Congress in addition to the White House.

Bets on Republican Sweep Drive Treasury Yields Higher

 

[tsptalk]

Makes sense. The move started the day after the debate. Thanks!

 

[weatherweenie]

Get ready for a return to higher inflation. That's what several economists are forecasting.
reuters.com

The Wall Street Journal seems to think it's because of election expectations. As if the latest debate drama has the market thinking Republicans have a high chance of taking over congress and the executive branch:



Bets on Republican Sweep Drive Treasury Yields Higher

 

[tsptalk]

Yields are pulling back so the 10-year yield didn't quite fill the overhead open gap, but the gap that was opened yesterday is now vying for attention. It's setting an early tone for smaller stocks outperforming the large caps, which is a necessary switch if this market is going to remain healthy.

This is the impression from John Hussman. He comes across as a perma-bear because he also seems to be bullish after a market crash, yet he's a highly respected fund manager.

though we did see other troughs in participation (two-tiered markets) just before the 1973-74 collapse, the 81-82 bear market, the 2000-2002 collapse, a 7-year low (though above 40%) before the 2007-09 collapse, and another before the early 2020 plunge.

It's probably nothing.

https://x.com/hussmanjp/status/1807964652845863136