tsptalk's Market Talk

[nasa1974]

After an initial negative reaction in the overnight futures, stocks opened higher on Monday morning and have maintained those gains. Of course the US military action and the possible counter-reaction left investors concerned about the global market reaction, but as I wrote about in today's commentary, these knee-jerk reactions in stocks are usually temporary as the market is heading in a direction and news, unless it changes the economic or monetary policy, are just distractions along the way.

The action in stocks has been bullish despite the month long consolidation.

Oil is down this morning despite Iran's threat to block the Strait of Hormuz and disrupt the supply lanes.

Gold and bitcoin are up, although bitcoin was down sharply over the weekend and had to to struggle just to get back over 100K.

The dollar popped above the 50-day EMA temporarily, but has settled back below that resistance for now.

View attachment 69503

I'm a little surprised. My individual stocks are all red. Great for my retirement 401K. Still a little over four hours before the market closes. Sticky pants on.

 

[tsptalk]

Fed watch:

The 10-year has fallen below the channel again.



Plus, the 2-year yield is the Fed's target generally, and it is currently 3.84%. Fed's Fund rate is still 4.25% - 4.5%.

 

[tsptalk]

It's early but stocks gapped up this morning after the "cease-fire" was announced last night. The S&P 500 moved above the May peak but pulled back from the initial highs after a Consumer Confidence Report came in weaker than expected.

Filling in the gap is not a bad thing - the sooner the better - but the chart is facing overhead resistance neat 6100 - 6150 and whether we'll see a significant double top pullback from the all-time highs remains to be seen, but the consolidation over the last month may help keep that under control. Currently 6063, there is still room above before that may be tested.

The 10-year Treasury is up this morning after Monday's breakdown, but it also reversed off the lows on Monday and it is back up today. Right now it is up testing the old support of the channel as resistance this time near 4.3%.



HYG is a indication of the credit market and you can see that it is making new highs, and the this opens the door to a potential new high in the S&P 500.

Powell just started speaking in from of the House Financial Committee so we could see some fireworks.

 

[tsptalk]

Stocks are flat this morning as the chaos of the past week seems to be subsiding. The potential for a double top pullback is certainly real as the S&P 500 gets closer to its all time highs, but until then the market loves to climb the wall of worry frustrating the underinvested who are looking to buy a dip.



The Nasdaq 100 (top tech stocks) has already made a new all time high with yesterday's gains. However, small caps and the I-fund are actually down moderately this morning, but that big tech is holding the S&P 500 in positive territory. There are some open gaps on the charts from Tuesday's gap up open. Perhaps that is what is going on there?

Oil and gold are up slightly this morning, and bitcoin is up nicely for a 2nd day after this weekend's sharp pullback.

 

[tsptalk]

New lows for the dollar (UUP)

 

[tsptalk]

Busy morning, so quickly, it looks like the S&P 500 is going to try to test its all time highs. It's a lure but it's what happens after a new high is made that matters at this point.

You can get profit taking from those who got their money back after being under water since the the prior peak in February.

However, FOMO buying could kick in for those who have been waiting to buy a meaningful pullback that hasn't really materialized since the April lows.

Liquidity and lower yields are a nice catalyst to keep this going, provided a bad headline doesn't change that sentiment. Tomorrow's PCE Prices report could be such a headline (or not.)

 

[tsptalk]

It's a little early but it feels like holiday trading has started already. China confirmed a trade deal with the US, but the PCE data was a little hotter than expected on the core side, however investors are showing no concern.

The S&P 500 is making new highs this morning, following the Nasdaq 100 which led the way earlier this week. This is where it can get tricky as profit taking could kick in, but that will be met with the bullish seasonality surrounding next week's holiday.



Yields and the dollar are slightly up after the PCE data, but they had been down hard leading into today's report.

Oil is up, gold and bitcoin are down.

 

[tsptalk]

More new highs this morning as stocks are modestly higher, but it feels quiet. The pullbacks have been getting bought but the trading action is measured on this final day of trading in the second quarter, with no sign of FOMO from the underinvested. I would think the underinvested money managers would want to pad their quarterly reports with stocks.

Holiday trading historically brings a bullish bias for this week, which may go against the typical pre-holiday reversal tendency. July's seasonality is fairly bullish in general with perhaps some mid-month weakness after earnings start rolling in.

Q2 earnings will be the next "normal" catalyst but with the tariff pause deadline approaching, we could start seeing deals being made in the interim. And of course a "no deal" with any major trade partner could cause some volatility.

 

[tsptalk]

Sorry, no update earlier today but it looks like we are finally seeing some weakness. It appears a little more serious than the S&P is showing as many of my high flyer type Nasdaq stocks I hold are down sharply. I suppose a cleansing was needed and a test of the breakout level was going to come eventually.

Is this the new month / new quarter change in direction? Just a pre-holiday reversal? Just a normal down day on a day that is historically very strong (July 1)?

It may be premature to think anything of this but something is off today, although small caps are leading and that may be the new change for the second half of the year.

I spent most of the night working on retiring the L2025 fund from the autotracker and adding the new L2075 fund. What a mess! Maybe I should take those L-funds off the autotracker as they shouldn't be timed / traded anyway since they already divide up the 5 main funds (G,F,C,S,I) in various allocations. Some people are spreading their money across several L-fund which makes no sense.

Thoughts on that?

 

[TommyIV]

Maybe I should take those L-funds off the autotracker as they shouldn't be timed / traded anyway since they already divide up the 5 main funds (G,F,C,S,I) in varies allocations. Some people are spreading their money across several L-fund which makes no sense.

I'm with you that the swapping of the L-funds can be done with the main five funds. But I can also imagine a TSP investor who holds a certain percentage in one of the Lfunds while using the remainder of their allocation to maneuver the markets in the main five. Sort of like how some investors have a portion of their portfolio set to long-term buy-and-holds investments alongside other money meant for trading.

Also, it is nice to see how one's investment strategy measures up alongside any particular Lfund in the AutoTracker standings.

 

[tsptalk]

I see your point. My issue is with people that do things like put 20% in 5 different L-funds.

The aggressive L-funds are doing great because of the I-fund's return this year.

 

[mcash]

OK, I'll explain the perhaps twisted logic behind my distribution of funds across multiple L-funds. I'm fundamentally a buy and holder not a trader. I rebalance maybe once year. My current distribution is 15% C, 15 S, 25 L-Income, 20 L2030, 15 L2040, and 10 L2050. I think of it from the perspective of "When will I need the money?". Being retired one might say I should be 100% L Income. However, but I can tolerate more risk/volatility than that fund offers and I want better returns as well. Now, I've read your speculation in the past that those who distribute their investment across multiple L funds probability have no idea as to how they are actually invested in the 5 underlying funds. Not true for all of us. My distribution is about as follows: 27% G, 5% F, 35% C, 20% S and 13% I. Of course I could make this allocation but then I'd lose the time adjustments that automatically occur within the L funds. I certainly cannot defend this sort of approach but it works for me and my returns over the years have been in the in the upper half based on the autotracker so I can't complain too much.

 

[TommyIV]

Of course I could make this allocation but then I'd lose the time adjustments that automatically occur within the L funds.

Great insight mcash! Thanks for sharing.

 

[tsptalk]

OK, you do you. It's your money. Normally, I'd say, who cares? It doesn't hurt anybody ... except that dang AutoTracker programmer.

The real hassle is when the TSP adds and takes away the funds - not what you're doing.

 

[tsptalk]

My distribution is about as follows: 27% G, 5% F, 35% C, 20% S and 13% I.

This is the 2030 L-fund's allocation right now.

G Fund 34.50%
F Fund 5.50%
C Fund 31.20%
S Fund 7.80%
I Fund 21.00%

There does seem to be big drop off in aggression between that one and the next L-fund, the L-income, which has 67% G-fund.

 

[rangerray]

Sorry, no update earlier today but it looks like we are finally seeing some weakness. It appears a little more serious than the S&P is showing as many of my high flyer type Nasdaq stocks I hold are down sharply. I suppose a cleansing was needed and a test of the breakout level was going to come eventually.

Is this the new month / new quarter change in direction? Just a pre-holiday reversal? Just a normal down day on a day that is historically very strong (July 1)?

It may be premature to think anything of this but something is off today, although small caps are leading and that may be the new change for the second half of the year.

I spent most of the night working on retiring the L2025 fund from the autotracker and adding the new L2075 fund. What a mess! Maybe I should take those L-funds off the autotracker as they shouldn't be timed / traded anyway since they already divide up the 5 main funds (G,F,C,S,I) in various allocations. Some people are spreading their money across several L-fund which makes no sense.

Thoughts on that?

Just let them go. Or, leave them in.

I can’t find a way to delete my stupid comment, so I made it neutral.


Sent from my iPhone using Tapatalk

 

[tsptalk]

Some weak jobs data but positive trade headlines are leading to some modestly higher gains this morning in stocks. Holiday trading is a factor but the big headline this week is tomorrow's monthly jobs report.

The ADP employment data came in with a loss of 33K jobs last month instead of a gain of 100K. We saw something similar last month where ADP was very low, but the monthly jobs report beat much loftier estimates, so who knows?

Yields are up on weak data? Sound like a pre-holiday reversal to me. I suspect yields will rollover again either on tomorrow's jobs report, or after the 3-day weekend.

The charts look good and it's tough to be too bearish at new highs, unless you are trying to pick a top. One day the top pickers will be right, but I don't think it will be in early July. Maybe late July / early August?