tsptalk's Market Talk

[tsptalk]

The market was expecting a more hawkish Fed, and after the policy statement was announced, the Fed may have been even a little more hawkish than those expectations.

They did cut the Fed Funds Rate by another 0.25%, but now they are down to perhaps two cuts in 2025 instead of 3 or 4.

Powell is set to hold his press conference shortly which may help with clarity, but the market's initial reaction is higher yields, new highs for the dollar, and stocks reversed the morning gains and replaced it with losses,

 

[tsptalk]

A big gap up opening, but after a huge loss like yesterday, the bears don't just go away. At least not initially. Look for the bears to put more pressure on but can they take out yesterday's lows? If they can't, the buyers will step up into the close.

If this wasn't a week before Christmas, I'd be more skeptical of any rally for a for a days, but eventually the calendar will favor the bulls and make the action less typical than if yesterday's sell off had happened in say, October.

 

[FAAM]

It's a quiet morning before this afternoon's Fed decision on interest rates, and more importantly, their outlook on monetary policy going forward. The chances of a rate cut are near 100%.

Stocks are mixed but near flat, yields and the dollar are up, but nothing significant, although the dollar is getting close to its 2024 highs again.

Sit tight. The fireworks will start at 2 PM ET.

Wow. Fireworks indeed yesterday's big drop. No more fireworks left for New Year's Eve celebrations... don't want anymore shows like that right now.

 

[tsptalk]

The lack of a spending bill gave the market a rough opening, but the PCE Prices and spending / income data helped ease inflation concerns for a day, and stocks are bouncing back from that weak open.

PCE Prices Actual: 0.1% B.com Forecast: 0.2% B.com Cons: 0.2% Prior: 0.2%	PCE Prices - Core Actual: 0.1% B.com Forecast: 0.2% B.com Cons: 0.2% Prior: 0.3%
Personal Income Actual: 0.3% B.com Forecast: 0.4% B.com Cons: 0.4% Prior: 0.7% Revised From: 0.6%	Personal Spending Actual: 0.4% B.com Forecast: 0.5% B.com Cons: 0.5% Prior: 0.3% Revised From: 0.4%

The charts have been doing some repairing. Neither the C or S fund charts have completely filled in their post election open gap, but support is trying to hold at key levels and the bulls are looking for a place to find some stability.

It's early and these gains could evaporate because the bears don't usually give up that easily, but the calendar is turning the bulls' way after the typical mid-December swoon, which went into another gear when the Fed got hawkish.

 

[tsptalk]

Nice rebound for stocks today, but there was some weakness as the day wore on taking the indices off their high. That may have been because we were heading into the weekend without a budget deal. But now...

Post in thread 'Government Shutdown and the TSP'

Dec 20, 2024

Government shutdown: House passes stopgap funding bill, sends it to Senate for vote

The House of Representatives approved a bipartisan bill to fund the government for three months and provide disaster relief and farm aid.

The vote caps off several days of chaos during which House Speaker Mike Johnson tried and failed to meet the demands of President-elect Donald Trump.

https://www.cnbc.com/2024/12/20/government-shutdown-house-speaker-trump-vote.html

• tsptalk

• 

 

[exnavyew]

Nice rebound for stocks today, but there was some weakness as the day wore on taking the indices off their high. That may have been because we were heading into the weekend without a budget deal. But now...

Post in thread 'Government Shutdown and the TSP'

Dec 20, 2024

Government shutdown: House passes stopgap funding bill, sends it to Senate for vote

The House of Representatives approved a bipartisan bill to fund the government for three months and provide disaster relief and farm aid.

The vote caps off several days of chaos during which House Speaker Mike Johnson tried and failed to meet the demands of President-elect Donald Trump.

https://www.cnbc.com/2024/12/20/government-shutdown-house-speaker-trump-vote.html

• tsptalk

• 

Just FYI:

The stock market loves Trump—but ‘crash protection’ is in high demand​

https://www.yahoo.com/finance/news/stock-market-loves-trump-crash-195646188.html

 

[tsptalk]

A very sluggish start to the holiday week as investors digest Friday's rally a bit. There are different variations of when the Santa Claus rally actually occurs. It starts this week but technically or officially, if there is such a thing as an official Santa Claus rally, it is the final 5 trading days of the year, and the first three of the New Year, so technically it doesn't start until tomorrow.

What's ironic about that is December 24, or Christmas Eve has had a negative average return over the last 30 years, according to sentimentrader.com's seasonality chart, and there have been more negative Xmas Eves than positive during that time.

That could be related to the wildly positive expectations over the years. When everyone knows or believes a day is going to be positive, who is left to buy that day? It's become a day to take profits.

But now that people realize that, maybe we should expect the opposite of the opposite.

Merry Christmas!

 

[nasa1974]

A very sluggish start to the holiday week as investors digest Friday's rally a bit. There are different variations of when the Santa Claus rally actually occurs. It starts this week but technically or officially, if there is such a thing as an official Santa Claus rally, it is the final 5 trading days of the year, and the first three of the New Year, so technically it doesn't start until tomorrow.

What's ironic about that is December 24, or Christmas Eve has had a negative average return over the last 30 years, according to sentimentrader.com's seasonality chart, and there have been more negative Xmas Eves than positive during that time.

That could be related to the wildly positive expectations over the years. When everyone knows or believes a day is going to be positive, who is left to buy that day? It's become a day to take profits.

But now that people realize that, maybe we should expect the opposite of the opposite.

Merry Christmas!

Isn't tomorrow a short trading day as well?

 

[tsptalk]

Yes, the market closes at 1 PM ET.

 

[tsptalk]

Stocks are behaving nicely on Christmas Eve, a day that hasn't been overly friendly to investors in more recent years.

The S&P 500 pushed above its 20-day EMA, an area that has been sticky the past couple of trading sessions.

Bonds are down sharply as yields continue to move higher.

Merry Christmas!

 

[evilanne]

Merry Christmas! So glad the site is back up!

 

[tsptalk]

Thank you! Merry Christmas!

 

[tsptalk]

A nice reaction to a weak open this morning, as the holiday bears continue to hibernate.

They're out there, and with trading volume light, they could have a presence, but the typical professional trader who might be shorting the market is not likely working much this week. Nor are investor selling to lock in profits. Tax selling is usually near complete by now or waiting for the new year to roll tax obligations over to 2025.

This is a general reason why stocks "tend" to do well this holiday week. Especially when there are large gains for the year.

 

[tsptalk]

Stocks are down sharply led by some big tech names. Bonds are behaving this morning but names like Nvidia and Tesla are are dragging down the Nasdaq and S&P and small caps are moving lower in sympathy. The trading volume is still quite low so the indices can get pushed around more easily.

While the bulls have the seasonal advantage, there is often choppiness in the final trading days year as investors reposition and reallocation for the new year.

Meanwhile, the bears are looking for weakness in a market that has been technically sound, but valuations have been getting concerning.

It may be more than that but the bond market is quiet, and there aren't really many headlines indicating trouble. Perhaps just more Fed pivot positioning.

 

[tsptalk]

Interesting. Large caps are finding support at the 50-day EMA this morning while the small caps found resistance there this week.

 

[tsptalk]

Here we go again. The market set us up for a Santa Claus rally and gave us the Grinch. This was supposed to be a quiet period but this always seems to happen when I try to take some time off.

The charts are pretty clear now. We have head and shoulders patterns, and we still have those open gaps below.



The interesting thing about head and shoulders patterns is that they are not always bearish. They are very bearish in down trending markets, but in upward trending markets they can be continuation patterns (of the upside.)

So, I'm not sure what's playing out here, but there is a case for this holding in the area and moving back up -- or it could be a major top forming. That's not too helpful but we can't rule either one out yet.

 

[tsptalk]

We see some green this morning, but not a lot of conviction yet. There could be some late action as investors make their final moves before the new year starts.

Yields are pulling back and this may be just what the doctor ordered for a rebound, although the dollar is up near new highs and that could be a headwind for prices.

It was a big year for stocks and the recent pullback could be an opportunity, or a warning for 2025. High evaluations are a concern for the bears but the growth in AI related stocks may keep the stock boom going.

Bitcoin had a big year and I posted some "expert" predictions for next year in another thread. The question is whether it is sucking resources away from the stock market, or can both sustain rallies?

2025 will probably not be as smooth as 2024, but hopefully that sets up good trading opportunities.

Happy New Year!

 

[tsptalk]

The new year is starting out on a bit of a roller coaster with the last move a free fall from the opening highs. There's still some green out there but the S&P just turned negative. Filling the morning gap isn't a bad thing, but buyers would need to step up here to repair the negative reversal damage.

Yields are down but they too reversed, this time to the upside after an earlier decline. The dollar is up sharply as well and this is helping put some pressure on stocks.

Small caps are off their highs but holding up better than the large caps so far this morning.

Let's see how the day plays out. Like I said, a gap fill to start the day isn't the worst thing that could happen, but the bulls don't want to see a negative close. The Santa Claus Rally is running out of time to try to turn the current loss into a typical holiday gain.

 

[tsptalk]

Stocks are up in early trading but the action lately feels rutterless as the bears get bolder after each modest rally. The indices seemed to have stopped climbing the wall of worry and instead it's more indecisiveness.

There's a lot going on in the world, but isn't there always? With a vote on the speaker of the house today and an inauguration two weeks away and economic policies still uncertain, I suppose we are in a limbo period.

Yields and the dollar are down this morning, helping keep some green on the charts, and small are leading again, which is a good sign.

 

[tsptalk]

Stocks are rallying this morning and the dollar is down, but the reason is questionable.

There was a story in the WaPo from an "anonymous source" that Trump is backing off from his tough stance on tariffs. Trump denied this on social media. The stock market seems to believe the anonymous source.

Big gains across the board are trying to erase the post-Xmas decline. The S-fund blasted through resistance with its 1% gain and is trying to negate that bearish looking flag that I talked about in today's commentary. And the dollar is falling on the news.

Are we setting up for give-backs if this story does turn out to be false, or was the market just looking for an excuse to rally?



More on the WaPo story: https://www.washingtonpost.com/business/2025/01/06/trump-tariff-economy-trade/

Trump's denial: https://cms.zerohedge.com/s3/files/inline-images/2025-01-06_09-22-48.png?itok=TFC0Tt5I