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tsptalk's Market Talk
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JTH
Well-known member
More diverging action this morning, this time the large caps are leading after META released good earnings last night, but something interesting is happening. The 10-year yield is tanking on weaker jobs data (jobless claims were higher than expected.) It fell below 4% for the first time in a while.
This normally helps small caps but now investors are getting a little concerned about the economy.
On the other hand the dollar is bouncing back to retrace some of yesterday's big loss, and this is putting pressure on the I-fund, which had done so well yesterday with the dollar falling. The UUP chart looks broken so this may be just a temporary relief rally.
As we saw yesterday, and much of last week, how the market starts the day isn't always how it ends. After the close today we get earning from Apple and Amazon. Then the jobs report tomorrow. It could get more volatile out there in the next couple of days.
This normally helps small caps but now investors are getting a little concerned about the economy.
On the other hand the dollar is bouncing back to retrace some of yesterday's big loss, and this is putting pressure on the I-fund, which had done so well yesterday with the dollar falling. The UUP chart looks broken so this may be just a temporary relief rally.
As we saw yesterday, and much of last week, how the market starts the day isn't always how it ends. After the close today we get earning from Apple and Amazon. Then the jobs report tomorrow. It could get more volatile out there in the next couple of days.
James48843
Well-known member
Holy Cow- big selloff today. Pre-markets all down more than 1.5% to over 2.5%. Oil down more than 2% too.
Sorry folks. This sell off is my fault. As I mentioned in today's commentary, I am out of town trying to take a mini-vacation, and it seems like every time I do so, we have market in chaos.
In these types of markets there are two different approaches for both those in cash and those who own stocks.
If you own stocks, one approach is the the Jim Cramer view which is, no one ever made a dime panicking. The other is, sell everything to refresh your brain and see things from a different point of view, even if that is buy back in fairly soon.
If you're lucky enough to be in cash or bonds, you can either pick up stocks at these "bargain" levels - bargain being a lot less then they were a coupe of week ago. Or you can stay put on the sidelines and wait until the charts improve, and the situation stabilizes.
There's obviously problems with each of those approaches as you could miss a monster snap back rally, or the market situation could get significant worse.
Bottom line is there's no easy answer and you have to find your threshold for pain and risk, vs. the reward of guessing right. It's mostly emotional trading in this environment, and things can go too far in either direction - either on the downside or a big relief rally. Understanding this and having a plan helps.
In these types of markets there are two different approaches for both those in cash and those who own stocks.
If you own stocks, one approach is the the Jim Cramer view which is, no one ever made a dime panicking. The other is, sell everything to refresh your brain and see things from a different point of view, even if that is buy back in fairly soon.
If you're lucky enough to be in cash or bonds, you can either pick up stocks at these "bargain" levels - bargain being a lot less then they were a coupe of week ago. Or you can stay put on the sidelines and wait until the charts improve, and the situation stabilizes.
There's obviously problems with each of those approaches as you could miss a monster snap back rally, or the market situation could get significant worse.
Bottom line is there's no easy answer and you have to find your threshold for pain and risk, vs. the reward of guessing right. It's mostly emotional trading in this environment, and things can go too far in either direction - either on the downside or a big relief rally. Understanding this and having a plan helps.
Still on vacation but monitoring the action.
No signs of capitulation yet in the S&P 500 so even if we get an up day or 3, it's tough to trust the rally without some signs of investors giving up at any cost. The VIX was near 66 yesterday so that is a sign of extreme fear and maybe even forced selling (margin calls, etc.) but watch trading volume.
We may have seen it in something like bitcoin, and the two charts below will illustrate the difference.
Oh, and a capitulation low does not necessarily mean prices only go higher from that point. The low may be in but it is also common to see big rebounds come back to retest those lows before it's considered a bottom.
Here's that move in the VIX yesterday:
No signs of capitulation yet in the S&P 500 so even if we get an up day or 3, it's tough to trust the rally without some signs of investors giving up at any cost. The VIX was near 66 yesterday so that is a sign of extreme fear and maybe even forced selling (margin calls, etc.) but watch trading volume.
We may have seen it in something like bitcoin, and the two charts below will illustrate the difference.
Oh, and a capitulation low does not necessarily mean prices only go higher from that point. The low may be in but it is also common to see big rebounds come back to retest those lows before it's considered a bottom.
Here's that move in the VIX yesterday:
Good morning. The rebound off the lows continues, and while some are saying that the worst is over now that some of the issues that caused the sell off are behind us, the technical damage to charts becomes into focus.
Retesting the lows after a sell off like we had is common, and that is the question for market timers. Wait it out or try to play the wiggles, and of course those lows don't have to hold, making the decision to hold or take profits on this bounce a difficult one.
The Yen carry trade debacle is potentially behind us after Japan said no more rate hikes from the BOJ are coming. The debate about whether the economy is in trouble continues based on the recent jobs report and whether it was an anomaly based on extreme weather conditions in July. Tomorrow's weekly jobless claims number could become the focus and next catalyst.
The I-fund is leading today after lagging badly yesterday. It's up big despite another move higher in the dollar this morning.
Retesting the lows after a sell off like we had is common, and that is the question for market timers. Wait it out or try to play the wiggles, and of course those lows don't have to hold, making the decision to hold or take profits on this bounce a difficult one.
The Yen carry trade debacle is potentially behind us after Japan said no more rate hikes from the BOJ are coming. The debate about whether the economy is in trouble continues based on the recent jobs report and whether it was an anomaly based on extreme weather conditions in July. Tomorrow's weekly jobless claims number could become the focus and next catalyst.
The I-fund is leading today after lagging badly yesterday. It's up big despite another move higher in the dollar this morning.
The new week starts with some mixed action as large cap tech rallies, while the Dow and small caps are in the red. The S&P 500 is up, but the Equal Weighted S&P 500 (same stocks) is flat. The 10-year yield is near even before this week's key inflation reports, the PPI Tuesday, and the CPI on Wednesday. While inflation seems to be less of an issue, any hot number could impact the Fed's decision on interest rates, and while investors are more concerned with the economy right now, the Fed is still laser focused on inflation.
It's a key week for the market after the big rebound off the lows to end last week, as resistance gets tested and some charts come off their short-term oversold conditions.
The dollar is up, which you would never know if you looked at the price of oil, natgas, gold, silver, and bitcoin, which are all up this morning.
The VIX is trading below 20 this morning.
It's a key week for the market after the big rebound off the lows to end last week, as resistance gets tested and some charts come off their short-term oversold conditions.
The dollar is up, which you would never know if you looked at the price of oil, natgas, gold, silver, and bitcoin, which are all up this morning.
The VIX is trading below 20 this morning.
We have yields lower after a quiet CPI report that came inline with estimates. In today's commentary I asked, "Can the stock market rally again on more good inflation data, or is it set up for a sell the news reaction - good or bad?"
We have resistance permeating the charts so this is a good test of the relief rally. Of course we could see a 2 - 3 day pullback, which would be justified given the swift move higher, but like 2023, it could also be a peak for the relief rally.
With the dollar down as well as yields, it would tend to be a positive catalyst for stocks.
Oil, gold, silver, and bitcoin are all down this morning, despite the assist from the weak dollar.
We have resistance permeating the charts so this is a good test of the relief rally. Of course we could see a 2 - 3 day pullback, which would be justified given the swift move higher, but like 2023, it could also be a peak for the relief rally.
With the dollar down as well as yields, it would tend to be a positive catalyst for stocks.
Oil, gold, silver, and bitcoin are all down this morning, despite the assist from the weak dollar.
The resistance is futile!
Very strong retail sales and fewer initial jobless claims than expected gave stocks a big boost at the open as yields rallied on the strong data. Again, this is the opposite of what the market was doing in the first half of the year when lower yields moves stocks higher, and higher yields concerned the stock market.
The chances of any rate hike in September did not fall below 100%, but the chances of a 0.50% cut have come down with that strong data.
Small caps and other indices blasted through resistance like a hot knife through butter. The Russell ETF is trying to fill in its Aug 2nd open gap.
And the Transports completed the job with this morning's gap up.
Once again the economic data is favorable to the stock market, but also again, all prior month's revisions went in the opposite direction. Things that make you go, hmmm.
08:30 ET: Retail Sales
Actual: 1.0% | B.com Cons: 0.3% | Prior: -0.2% | Revised From: 0.0%
08:30 ET: Initial Claims
Actual: 227K | B.com Cons: 232K | Prior: 234K | Revised From: 233K
08:30 ET: Continuing Claims
Actual: 1864K | B.com Forecast: NA | B.com Cons: NA | Prior: 1871K | Revised From: 1875K
Very strong retail sales and fewer initial jobless claims than expected gave stocks a big boost at the open as yields rallied on the strong data. Again, this is the opposite of what the market was doing in the first half of the year when lower yields moves stocks higher, and higher yields concerned the stock market.
The chances of any rate hike in September did not fall below 100%, but the chances of a 0.50% cut have come down with that strong data.
Small caps and other indices blasted through resistance like a hot knife through butter. The Russell ETF is trying to fill in its Aug 2nd open gap.
And the Transports completed the job with this morning's gap up.
Once again the economic data is favorable to the stock market, but also again, all prior month's revisions went in the opposite direction. Things that make you go, hmmm.
08:30 ET: Retail Sales
Actual: 1.0% | B.com Cons: 0.3% | Prior: -0.2% | Revised From: 0.0%
08:30 ET: Initial Claims
Actual: 227K | B.com Cons: 232K | Prior: 234K | Revised From: 233K
08:30 ET: Continuing Claims
Actual: 1864K | B.com Forecast: NA | B.com Cons: NA | Prior: 1871K | Revised From: 1875K
So, for now, it seems the market prefers a healthy economy over a deeper rate cut? That seems too reasonable by market standards.
But seriously, how could the bulls not celebrate a week of acceptable economic data? The PPI, CPI, Retail, Initial Jobless Claims were all in line with or better than expectations. But what do they have to look forward to over the next week? The Initial Jobless Claims comes every week. Will it be a market obsession until the September rate cut? And how will the market action be dictated until then?
We have the Federal Open Market Committee Minutes coming Wednesday, but that meeting took place before the July Jobs Report and market correction so it may be irrelevant by now.
To me, it seems the market may be exhausting itself with nothing to keep it floating over the next few days. I'm considering taking some profits today. Am I missing something?
But seriously, how could the bulls not celebrate a week of acceptable economic data? The PPI, CPI, Retail, Initial Jobless Claims were all in line with or better than expectations. But what do they have to look forward to over the next week? The Initial Jobless Claims comes every week. Will it be a market obsession until the September rate cut? And how will the market action be dictated until then?
We have the Federal Open Market Committee Minutes coming Wednesday, but that meeting took place before the July Jobs Report and market correction so it may be irrelevant by now.
To me, it seems the market may be exhausting itself with nothing to keep it floating over the next few days. I'm considering taking some profits today. Am I missing something?
The gap and go look is intriguing for the bullish case, and the heightened fear in the Fear / Greed Indicator is fuel for more upside, but with the economic data good but constantly being revised lower, can we trust anything? This is an election year and there's a reason why August, normally a weaker month for stocks, does very well during election years.
I'll never forget when John McCain, when running for president in the summer of 2008, was asked about the economy and he said it was looking very good. Fast forward a month or two and we had the financial crisis. Moral. Believe nothing!
I'll never forget when John McCain, when running for president in the summer of 2008, was asked about the economy and he said it was looking very good. Fast forward a month or two and we had the financial crisis. Moral. Believe nothing!
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