It was quite a first day of trading for August where the indices shot out of the gate to the upside with gains of 0.50% to more than 1% in some indices, only to see it all flip over and close mixed and at the lows of the day. The Dow, up 250-points at the highs, lost 97 by the close. The Nasdaq did hold onto a small gain. Yields and the dollar were down. Oil sold off sharply, as did many economically sensitive markets.
| Daily TSP Funds Return
The Covid delta variant worries continue to show, at least that's what we suspect given the sell off in yields again, and the reversal in stocks. Will we see broad shutdowns again? I'm sure in some places, but mandatory vaccines and new mask mandates in some areas are certainly reigniting fears with the public so many investors may be anticipating the shutdowns, which would be a game changer.
Internally the advance / decline numbers were about what you'd expect - negative on the NYSE and flat to positive on the Nasdaq with no real alarming numbers.
The yield on the
10-year Treasury fell sharply hitting 1.15% at the lows of the day, and coming close to testing the recent lows. The bond market seems concerned about something, and trading below the 50 and 200-day EMAs, there are no signs yet that it is about to turn around. Holding at the July 20 low would help.
The dollar was down but it closed off its lows and held above the 50-day EMA.
As I mentioned yesterday, earnings will continue to come in but there are few market movers left for this quarter. The market will now likely turn to the economic data for guidance. We did get a stronger than expected ISM manufacturing number yesterday, but this week's big report will be the July jobs report which will be released on Friday. Estimates are looking for a lofty gain of 925,000 new jobs, and an unemployment rate of 5.6%.
The S&P 500 (C-fund) opened higher on the day but after about an hour it started to stall and rollover. The loss was minimal but the action was suspect with the negative reversal day, and closing at the lows. No major red flags or anything yet, but a test of the 20-day EMA wouldn't be surprising. From there it's a matter of whether the dip buyers are concerned about the new Covid concerns.
The DWCPF (S-fund) did it again. For a third straight day the chart ran up to that longer-term resistance line, and backed off. The negative reversal didn't do anything to help the short-term technical picture, but it's still above the 50-day EMA and we have seen the dip buyers show up in that area over the last week or two. If they don't, it's a long way down to the next level of support.
The EFA / I-fund was up and those late day sell offs tend to do that when the Asian and European markets close with gains, with the dollar being down earlier in the day. The TSP hasn't posted a price yet as of this writing (Monday evening), and they could go either way - try to adjust the number down based on the late action in the U.S. market, or they can post nice gain and perhaps adjust Tuesday's price accordingly if Monday's is off.
The Dow Transportation Index again saw very suspicious action as it failed at the 100-day EMA, after that average has held as support for over a year until July. Now it may start acting as resistance.
The BND (bonds / F-fund) rallied on the drop in yields, and this continues to surprise me - and many other folks who believe the economy is supposed to be growing. Perhaps it's the Covid reaction, but this rally is almost 5 months old now. The bear flag that I've been noting, is no longer there.
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