tsptalk's Market Talk

[tsptalk]

This week has gotten off to an inauspicious start, but we were warned. A while back Whipsaw posted the list of "worst weeks" for the stock market and this was one of them.

It's earnings season and perhaps there is a tendency to buy the rumor leading up to the heavy earnings releases, and sell the news this week? I'm not sure, but we see stocks are off to a sluggish start.

The tendency doesn't tell us that stocks crash or anything, but it is a below average week, and so far, just into day 2, it has been.

The election is getting close and we've learned in the past that anything can happen, and the question is if the market will be ready this year if the race is too close to call, not only on election day, but election week, or election month.

Big tech is again holding up better than the broader indices, and in a week or so we'll start getting more Mag 7 earnings reposts come in, so that will be a market moving week. Nvidia's report is not until the 19th, I believe, and they have become the most anticipated report each quarter.

The 10-year Treasury yield is up again and flirting with 4.2%, but there is a lot of important resistance in that area.

 

[tsptalk]

Stocks are dipping while yields are ripping. That sums up my analysis for this morning.


Sorry folks - I have been under the hood of the website servers the last several days moving it to a new server and getting the new forum going.

I will hide this link in here for anyone who wants a sneak peak at the new forum.

I had warned you it was new, new software, new company, and many of the bells and whistles we had either won't be available or will take some time to install.

Here's the link but a reminder that if you post there, the posts will likely get overwritten. Once I approve the new software, the current posts and data old forum data (this stuff) will get recopied over there overwriting anything being done on that server.

https://forum.tsptalk.com/

 

[tsptalk]

The S-fund is trying to hold onto key support this morning. Lots going on the next two weeks with Mag 7 earnings and of course the election. Both parties will bring out the big guns now and could shake things up.

We'll be switching to the new forum tomorrow!

 

[tsptalk]

Sorry folks. Just getting the new forum, and the new servers working properly, and tweaking some issues I am finding, so I haven't been on top of posting otherwise.

I appreciate your patience.

The market opened very strongly this morning. No major attempt to fill the gap yet, but isn't always easy to trust Monday gaps. The indices are holding and bouncing off of key support during this historically strong period in the last 4 days of Oct and first 3 in Nov.

If the gains can hold into the close, the bulls may have something here.

 

[tsptalk]

Those yields just keep going up and while the 4.33% yield on the 10-year isn't terrible, it's the pace of the increase that is concerning.

We got a lower GDP estimate from the Atlanta Fed, and if anything, that defies why yields are rallying. Is the bond market sensing inflation? The PCE prices inflation report on Thursday could be big.

Google reports after the bell today.

 

[tsptalk]

Yields and the dollar are down slightly this morning, but the action has been volatile, especially in yields which have already come well off their lows.

Sill that hasn't stopped small caps from leading again today with a healthy gain near 0.70% in early trading. The EFA (I-fund) is down again as it continues to lag.

The stock market is looking good and as we suspected, the economic data was going to be great leading up to the election. I see Yahoo's financial headline today is "The US economy is 'doing just fine'".

The jobs report on Friday and and tomorrow's PCE inflation report will likely not disappoint, but after the election we will probably get a better judge of the data. We have no real signs of GDP slowing too badly, and while there are certainly always things to worry about, right now the stock market is climbing any wall of worry.

 

[TommyIV]

It is suspicious to see the S&P 500 stalling despite the heavy-weight Alphabet up more than 5% this morning after its earnings report. Especially if that is a sneak peek to tech earnings to come.

 

[tsptalk]

Yeah, it does seem odd. I checked and there are a lot of big names in the top 30 down today dragging on the S&P.

# Company Symbol Weight Price Chg % Chg
1 Apple Inc. AAPL 7.21% 231.23 -2.44 (-1.04%)
2 Nvidia Corp NVDA 7.02% 139.61 -1.64 (-1.16%)
11 Eli Lilly & Co. LLY 1.43% 849.72 -53.86 (-5.96%)
28 Advanced Micro Devices AMD 0.53% 150.61 -15.64 (-9.41%)

(Sorry for the format)

Here's a list by weight of each company in the S&P:

S&P 500 Companies by Weight

What's funny is that Alphabet is # 6 and 8 on the list with A and B shares.

 

[tsptalk]

Losses in Microsoft and Meta after posting earnings is weighing heavily on the S&P 500 and Nasdaq. Small caps were holding up but eventually relented to the downside pressure.

The S&P is currently down about 1.5%, the Nasdaq 2.4% and the small caps of the S-fund 0.90% as of about 11 AM ET.

Core PCE Pricing and Spending data came in a little hotter than expected sending yield higher again.

When Microsoft moves, the 3rd largest weighted stock in the S&P, it's hard to turn the ship around without it.

The Dow Transportation Index is flat after giving up some earlier gains. That's not helping anyone in the stock funds, but it may show that money is moving into other sectors and not just into cash.

Apple and Amazon report after the bell today, so we could get more volatility - up or down, on that news tomorrow.

 

[tsptalk]

Stocks are up in early trading, although so far only getting back about half of yesterday's losses. This is after the surprisingly weak October jobs report.

https://www.wsj.com/economy/jobs/jobs-report-october-unemployment-economy-f771b682?st=7Uxdws&reflink=e2twmkts

12,000 jobs were created last month, with 40K of them being government jobs. In other words the private sector had a large job loss. The hurricanes and the Boeing strike were considered major factors, but we also saw the trend of downward revisions to prior months continue as the August and September jobs reports were decreased by 112,000 jobs combined.

Stocks are likely up because this report solidifies at least a 0.25% rate cut next week by the Fed. Not that there was much doubt that a cut was coming, but ironically yields are back up again this morning after an initial plunge directly after the release of the jobs report.

All in all it is a tough report for the economy, but good if you're looking for lower interest rates. So far the rebound in stocks is robust this morning but it must hold into the close otherwise, it's just a dead cat bounce following Thursday's brutal sell off.

I had been critical of these reports as being held up because of not wanting any negative surprises before the election, so this is a little surprising. Warning: Speculation ahead: Of course early voting and mail in ballots may mean the report won't have as much influence on the election.

 

[tsptalk]

Yields and the dollar are pulling back this morning and stocks are gaining some ground in early trading.

The trend recently has been weaker closes and that usually means the smart money is doing the selling. So, here we are the day before election day, stocks are up, but there's plenty of time left to see who does what by the close.

In my commentary today I talk about the recent developments in the election and how that may be influencing the stocks market.

Because of the decline in yields and the dollar, the S and I-funds are having strong days and leading the large caps of the C-fund.