tsptalk's Market Talk

[tsptalk]

Stocks are flat but mixed this morning, but leaning on the negative side as he Nasdaq just took a turn to the downside after positive open. Yields are up after a better than expected Jobless Claims report.

The dog days of summer will start in the second half of July so the April to early July rally may be put to the test as the easy money off the April oversold lows may be coming to an end..

I've been posting this old chart in my commentary recently, and but it has been working surprisingly well. Today would be day +4 after the 4th of July holiday, suggesting today is positive about 55% of the time, but the average return is basically flat. Yesterday (+3) we got the big gain day, and tomorrow (+5) also has a decent record.



Some time next week, the stronger than average part of July will wane and the stock market will start to have more of a wind in its face through early October. That doesn't mean stocks will be down - rather that seasonality is no longer a benefit but possibly a hindrance.

 

[tsptalk]

Stocks opened lower this morning as the tariff show resumes. The market may be in search of a reason to do some backing and filling after the recent rally, and nothing like some tariff headlines to shake things up and increase volatility.

The under-invested are welcoming it and that could mean dip buyers won't be too far off. The charts look good, but a little extended and a little choppiness or volatility wouldn't be the worst thing to happen to the market. However, timing a strong market can be tricky and often backfires.

Last year July, August, and September were all positive months for the S&P 500, but there was a nasty sell off in there that started in mid-July and accelerated into into early August, but it turned out to be a great buying opportunity.




Oil, gold, and most of the cryptos are all up big. Bitcoin hit 118,000 this morning.

 

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The CPI report came in a little hotter than expected sending yields and the dollar higher, and that is adding some pressure to what was looking like a very positive open for stocks.

The rising support is holding and we got a gap up open on the S&P 500, but yields and the dollar started to move higher and while it is just some backing and filling of the opening gap so far, stocks have lost a little steam. The S and I funds are down modestly, but there's a long day of trading ahead and we'll see if the bulls can battle back like they have been.



Large cap tech is actually an exception today as it is doing well and pushing the Nasdaq to another new high this morning.

So far yields have held in a range between about 4.1% and 4.6% but the shorter term trend is moving up now after breaking out earlier this month.



The dollar too has been strong this month and that's causing the I-fund to lag.

Bitcoin is off yesterday's highs, gold is down, and oil is flat.

We'll get the PPI report tomorrow and we'll have to wait to see if that confirms today's warm CPI data.

Hey! I didn't mention seasonality for once. Oops!

 

[tsptalk]

Stocks have been hovering near the flat line this morning , at least the S&P 500 and Nasdaq, while small caps are doing a little better with yields down this morning after a cooler than expected PPI report.

The 10-year yield has given up about half of Tuesday's gain after a flat PPI report. The report showed no wholesale price increase in June, although it did revise May's up quite a bit.

The year to date chart (2nd below) shows that yields, outside of the April tariff tantrum, have been very stable and hovering between 4.1% and 4.6% and that has allowed the stock market, as well as businesses, to do business without concern for adjusting to wildly swinging rates.



That is compared to the post Covid yields (zoomed out 5 years) that helped cause the 2021 - 2023 inflation and 2022 bear market.

So far so good right now but the 10-year has been rallying in July and if we start seeing 4.7% and higher, that's when the stock market could get cranky.

The CPI on Tuesday did cause some concerns about inflation and the yield moved up to 4.5%, but today's PPI is easing come of those concerns and yields are dipping back.

 

[tsptalk]

If you ever wondered what would happen to the dollar if Trump threatens to fire Powell...

President Donald Trump plans to fire Federal Reserve Chairman Jerome Powell “soon,” according to a White House official.

 

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If you ever wondered what would happen to the dollar if Trump threatens to fire Powell...

View attachment 69693

And after Trump says that's "highly unlikely"...