tsptalk's Market Talk

[tsptalk]

The FOMC meeting minutes come out at 2PM ET. Will it tack onto the gains or taketh away from this morning's rally?

 

[tsptalk]

The futures were positive this morning until...

These two reports suggest that the jobs market is still very strong so investors interpret that as the Fed needing to continue to raise interest rates aggressively.

That's the world we're living in right now where good news is bad news.

Tomorrow we'll get the non-farm payrolls jobs report where estimates are looking for 200,ooo - 215,000 jobs gained, and an unemployment rate of 3.7%. If it's 3.8% we may actually get a rally.

 

[tsptalk]

The strong jobs data is sending yields and the dollar higher, putting the pressure on the stock market.

 

[tsptalk]

It's a little surprising, but so far the market is applauding the stronger than expected jobs report - just because wage growth was less than expected. The number of jobs created was slightly more than expected and the unemployment rate dropped to 3.5%, 0.2% below estimates, so the rally is a little confusing. https://www.tsptalk.com/mb/the-economy/37668-monthly-jobs-report-2.html#post682416

That said I am still more than skeptical after the recent published report that the jobs reports had overstated job growth by over 1 million between last March and June. Remember this?

https://www.tsptalk.com/mb/the-economy/40033-job-gains-year-overstated-1-1-million.html

But a rally is a rally and it can be bought or sold. The problem is that so far it hasn't broke the indices out of their range... not yet anyway, which many of us were hoping would happen.

 

[nasa1974]

Since covid the market has been squirrely. Almost seems to do the opposite of the news. Good news market down. Bad news market up. But a rally is a rally and I'll take all the positive I can right now.

 

[tsptalk]

The dollar and the bond market are confirming this move in stocks by declining, or are they leading and stocks are reacting? This does seem a little odd as I said in my previous post, since the jobs data itself was quite strong. It must be all about the wages.

Of course the indices have been here before and have yet to breakout of this 3-week trading range. Is it different this time?

 

[tsptalk]

It made its way above the 50-day EMA but here it is at the infamous 3900 level again - a level that has been holding on an intraday and closing basis as support and resistance often this year.

 

[retread]

I guess bear flags don't break down anymore

 

[tsptalk]

I guess bear flags don't break down anymore

Yes, it's really interesting. For a long time put / call ratios were great indicators, but then they stopped working for a few years. Sentiment was similar. It's as if the people that control the market [sic] figure out how to get people who think they've figured things out, to be wrong. It could be cyclical / ever changing. But yes, right now, flags are not working.

 

[retread]

It's a little surprising, but so far the market is applauding the stronger than expected jobs report - just because wage growth was less than expected.

Saw this on MarketWatch:

“Translated from Fedspeak, the FOMC members do not like stock market rallies, since they fear it could result in potentially inflationary consumer spending,” said Louis Navellier, president and founder of Navellier & Associates, in a Thursday note. Said differently, if equities continue to rally on bad economic news, the Fed will need to push forward to an even higher terminal rate and unofficially add ‘weaker stocks’ to the mandate,” wrote Ian Lyngen and Benjamin Jeffery, rates strategist at BMO Capital Markets, in a Wednesday note.

“The minutes revealed another deliberate effort to dissuade the market of the notion that the Fed ‘put’ will be triggered in 2023,” they wrote."

It's like the markets are in denial. I remember in Oct or Nov one of the FOMC guys suggested rates might go as high as 7% and boy for few hours the market threw a tantrum and dropped rapidly. It later recovered but it just shows you how unstable things are right now.

 

[tsptalk]

The dollar is down sharply again, and testing the recent lows, while bonds are up slightly and dealing with some overhear resistance. Make or break time for this two-day rally in stocks.

Meanwhile the S&P is above that key 3900 area and looking toward that small open gap near 3960.

 

[nasa1974]

Looking good so far, but we still have 3 hours. :wall:

 

[tsptalk]

A little counter move in yields and the dollar this morning has stocks on the choppy side again.

The Fed didn't say much in his speech this morning regarding interest rates so it's been rather quiet.

Yields and the dollar are higher this morning after the sharp decline in both yesterday. That's putting some pressure on the equity and bond markets.

 

[tsptalk]

Another rally into a CPI report (tomorrow.) Last month it set off a wild negative reversal day, and in November it triggered a big rally followed by some sideways action but positive.

Yields are down slightly and the dollar is flat and dancing on the recent lows.

It looks like the market is bracing for a favorable report. Unfortunately the Fed doesn't seem to care as much about price improvement as it does about wage data so it's questionable whether a CPI driven rally can hold again.

Earnings estimates will dominate the second half of January and there isn't another Fed meeting until February so the bulls and bears will play for the next several days and make of the CPI what they will.

 

[tsptalk]

Another nice day for the Transports, and the chart is improving everyday, but looks at the upcoming resistance. The CPI could make or break this move, I suppose, although earnings in the coming week will have a say.

 

[tsptalk]

Just before the opening bell the dollar and yields are down sharply on the CPI report which came in close to expectations.

Stocks futures are choppy as investors scramble to decide if this is a bear market changer, or do we see a sell the news reaction after this week's rally?

Oil, metals, and bitcoin are up.

 

[tsptalk]

 

[tsptalk]

 

[tsptalk]

 

[tsptalk]

We're seeing some weakness in the equities market this morning, and that's certainly expected given the size of the recent run higher, and the resistance that we see on the chart, which can be a self-fulfilling prophesy as chart technicians take profits. A breakout in the near future can change market sentiment, but until then there will be tentative buying in this area.

Yields and the dollar are up adding to the pressure on stocks, and it all adds up at the moment. Everyone is expecting a pullback in this area, but will that be too easy? Will "they" push a breakout and then take it down again? They need to figure out a way to get your money somehow.

I see a lot of selling on the autotracker this morning so again, will it really be that easy?