tsptalk's Market Talk

[tsptalk]

As I mentioned in another thread, it can take at least 6 to 18 months for an interest rate cut to impact the economy outside of the quick change to loan rates, etc.

They say the stock market is a forward looking indicator. When stocks are going up it is because it is looking down the road and not what is happening now. When the good data starts unfolding into the economy down the road, i.e. growing labor market, etc., we'll probably get a "sell the news" reaction.

The fact that there was already a 97% chance of a rate cut at this month's meeting, any rally today could be vulnerable. It was priced in. But they are now pricing in 2 or 3 cuts more aggressively.

December meeting probabilities:

 

[tsptalk]

The gap up rally triggered by the jobs report quickly hit a wall and the reality of the weakening labor market may be creeping in. Was this a 'buy the rumor, sell the news' on rate cuts - now that the probability of a 0.25% cut has reached 100%?

 

[nasa1974]

The gap up rally triggered by the jobs report quickly hit a wall and the reality of the weakening labor market may be creeping in. Was this a 'buy the rumor, sell the news' on rate cuts - now that the probability of a 0.25% cut has reached 100%?

View attachment 70086

The "C" fund didn't fare well, but the "S" & "I" funds held their own. So, what can we expect next week???

 

[tsptalk]

Stocks are mixed this morning although mostly higher, at least for the large caps. Small caps are lagging despite yields being down slightly again.

The S&P 500 is reacting surprisingly positively to Friday's negative reversal day, but that sore thumb is sticking up and could turn out to be a temporary peak, although most charts are looking good and the trend is up.



We have some important inflation data coming out this week, the PPI and CPI will be out on Wednesday and Thursday respectively, and that will feed into next week's FOMC meeting and decision on interest rates.

Now we're talking 0.25% or possibly 0.50% after the weak jobs data last week.

Gold, oil, and bitcoin are all up this morning.

 

[tsptalk]

Yields and the dollar are up this morning putting some pressure on stocks, particularly the small caps.

The S&P 500 is off a bit after a positive open, and Friday's high is still the intraday high. Still no pullbacks of 3% or more since April but the S&P has been consolidating some with the index only up about 1% from that late July highs and the current levels.



The PMO momentum indicator is still showing a negative divergence, but that has been going on for two months with little effect.

Oil is up, gold and bitcoin are flat.

We get the PPI report tomorrow and the CPI on Thursday.

 

[tsptalk]

Will this be the first close below the 50-day EMA in a month for the Transports?

 

[tsptalk]

The PPI wholesale prices report came in much lower than expected and that is sending yields and the dollar lower, and stocks, with the help of a 30% rally in Oracle, are up nicely and testing their high end of the recent range.



The PPI data showed that the producers may be eating any costs of inflation so far as their margins are coming down, and so far it shows that they are not passing it onto the consumer. Tomorrow's CPI data will be more telling as we will get an idea how true that is.

The move in Oracle on earnings forecasts is astonishing Wall Street. For a company of this size to be up almost 40% in one day is incredible.




It's early and who knows where we end up at the day, but we are seeing confirming moves in other areas with gold, oil and the cryptos all up today as well.

 

[tsptalk]

The PPI data showed that the producers may be eating any costs of inflation so far as their margins are coming down, and so far it shows that they are not passing it onto the consumer. Tomorrow's CPI data will be more telling as we will get an idea how true that is.

https://twitter.com/x/status/1965757001868415380

 

[tsptalk]

The CPI data came in a little hotter than expected but investors are counting that it won't be enough to interfere with the Fed's plans to cut interest rates next week.

Yields and the dollar are down on the higher than expected jobless claims data and that is adding to the bullish reaction. The 10-year is threatening to move below 4.0%



The question investors are asking now is if this market could see a sell the news reaction after the cuts, especially while we're in the typically troubling September / October months, but the underinvested seem to be jumping in on every dip quickly.

Gold and oil are down this morning, while the cryptos are rallying.

 

[tsptalk]

Stocks are mixed this morning as the indices digest Thursday's big gains. The Dow and small caps are down, the Nasdaq is up making new highs, and the S&P is currently flat.

Higher yields and a rally in the dollar are putting pressure on the S and I-funds , and the S&P is looking to close positive for a 5th straight day but it is hugging the flat line in early trading.

The weak dollar is helping gold, oil, and several crypto currencies to gains this morning.

Calling for a top has been a fool's folly this summer but I am watching Apple, which up nicely for a second straight day. Perhaps no longer the darling of the stock market but still one of the largest companies in the world and a leader, may be creating a head and shoulders pattern which could become toppy if the right shoulder fails in this area.

 

[tsptalk]

The stock market is getting off to a good start this Monday morning with all the major indices showing strong gains in early trading. Yields and the dollar are down modestly, which doesn't hurt.

Big gains in Google and Tesla are setting the tone for the tech heavy Nasdaq and that is bleeding into the S&P 500.



The VIX (Volatility Indicator) is up 3% which is a little odd given the gains in stocks, but it has been so low that it is starting to feel like complacency.

Oil and Gold are up while bitcoin is slipping after a recent gain.

Small caps are hanging in there as well after lagging some last week, and coiling up for something, but it was reported that a member of the House Financial Services Committee is making some bets against small caps in his personal account. Interesting. We talk more about this in today's Plus Report.

 

[rdodson]

I would be surprised if Powell decides no interest rate cut on Wednesday.
I am not saying that will happen, only that it would not surprise me.
Have toe in small caps at this time.

 

[nasa1974]

A good start for the week. I agree with rdodson. It won't surprise me either way what Powell does. The numbers across the board aren't good but they are not really bad. I don't expect the numbers to get better anytime soon but it can happen. I'm shopping the sales, but my grocery cost is up. Not a lot but noticeable.

 

[tsptalk]

Stocks open mixed and flat this morning and there will be some jockeying for position in front of tomorrow's interest rate decision.

Yields are flat but the dollar is falling for some reason. That is giving commodities a boost as gold, oil, and bitcoin are up.

I have to head to the airport this morning so I will check back in later.

 

[tsptalk]

It's a quiet morning in the pre-Fed hours of trading. There's nothing unusual going on, although small caps are perky with the S-fund's DWCPF up about a half percent for some reason. There was a positive reversal yesterday in that index, so momentum did shift to the small caps late yesterday.

Other than that, yields and the dollar are up slightly, gold oil, and bitcoin are down modestly.

The Fed is expected to cut rates by a 0.25% today, but there are a lot of moving parts with this one, and the key will be how they set up the follow up meetings. As I mentioned in today's commentary, most investors want to see a cut and there are reasons to do so, but there are also good arguments for not cutting.

The fireworks will begin at 2 PM ET.

 

[tsptalk]

After a choppy and indecisive day of trading following the Fed rate cuts, investors seem to have decided today that all is well and that the rate cuts are going to be beneficial, especially growth stocks as the small caps have taken the lead again.

The S-fund's DWCPF Index is testing yesterday's highs after breaking back above the top of the trading channel. It is clearly extended above the moving averages so it remains vulnerable to a pullback, but the trend is up and the bulls are willing to buy at all time highs, which seems bullish.




Yields are up quite a bit in an ironic move after the Fed rate cut, but the 10-year yield was due for a rebound.

The dollar is also up big, cleaning up some open gaps and retesting its resistance and the 50-day EMA.



That is putting a little pressure on the I-fund (ACWX) which is up just slightly and lagging US stocks by quite a bit this morning.

Impressive action, but watch how the indices react near Wednesday's highs. Do they have the juice to continue to rally on something that has been priced in for weeks?

 

[James48843]

So how much longer can this go on?

I’m really thinking it’s gonna run out of steam any day now. When will the 10% pullback hit? It’s overdue.

 

[weatherweenie]

So how much longer can this go on?

I’m really thinking it’s gonna run out of steam any day now. When will the 10% pullback hit? It’s overdue.

Where's Birchtree when you need him?

 

[tsptalk]

Stocks are mixed this morning with the S&P 500 (C) trying to hold onto a modest gain, while the small caps (S) and I-fund are lagging with yields and the dollar moving higher.

The bulls are barely blinking while the bears argue that things have gone too far, too fast.

These various time frames of the S&P 500 may be telling us yes... and no.

The rally off the April lows has been explosive but so far none of the reasons associated with that tariff tantrum have hurt the economy, so the chart is just resuming where it left off before that decline.



That could change, but it hasn't yet.

Gold is up while oil and bitcoin are trading lower this morning.

 

[bmneveu]

So how much longer can this go on?

I’m really thinking it’s gonna run out of steam any day now. When will the 10% pullback hit? It’s overdue.

The lower rates go, the cheaper it gets to borrow money. Borrowed money gets invested into the stock market, which continues to push it up. I don't see this market going down for anything more than a short pullback.