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Apple, Boeing, Fed all help stocks to big rally

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Stocks rallied initially off of Apple's earnings, as well as Boeing's, which accounted for much of the Dow's 435-point (1.77%) gain, but it was the Fed that pushed it into another gear as their once hawkish stance has become quite dovish and accommodative for investors. The S&P 500 came very close to hitting its 200-day EMA at the highs yesterday, so now we'll see if the bulls still have anything left to push it above.

Daily TSP Funds Return

My bad on the "no press conference." I thought I had read that there would not be a press conference after yesterday's meeting, but there was Chairman Powell at the podium.

It's an emotional day, a Fed policy statement day, and while it may be setting the tone for a promising environment for stocks, you have to wonder if everything isn't not priced in already, or close to it. Investors know where the Fed stands on rates and the balance sheet, and stocks rallied on it. We know there has been talks with China regarding trade this week and the rally suggests they are anticipating a favorable outcome. Earnings have been good, but we've been expecting that for months and expectations were high and stocks have rallied on that news. So what's left as a catalyst?

The bears have been sufficiently beaten up and the bulls are likely pretty confident, and that's about when markets tends to peak. I have been saying that for a while now but obviously the continued rallied has magnified those beliefs. I'm trying to be patient but I understand how hard it is when we see gains like we had yesterday. If February is a positive month, I may need a long vacation away from the markets. If it is down, I certainly won't claim victory since we blew this call and even a broken clock is right twice a day.

Just a reminder that, according to sentimenTrader.com, "Since the January 2018 meeting, SPY has declined on 7 out of 8 days when the FOMC announced its policy on rates, which it will do again on Wednesday."

This tells us that just another strong tendency was ignored and the opposite happened, as we have been seeing often during this recent rally. They also said, "The day after [The FOMC meeting], it was down 5 of 8 times and even from 6-9 days later, it was still down 6 of the 8."

So, for whatever that is worth. What is sentimenTrader.com saying today? "Heading into Wednesday, stocks have not reacted well to Federal Reserve pronouncements. Todaysí rally was a big change, and one of the S&P 500 fundís (SPY) best-ever gains on a FOMC decision day. Other times it gained more than 1.5%, it added to gains the next day only 33% of the time, but three days later 75% of the time, then it was mixed."

Microsoft disappointed after the bell with a miss on revenue and the stock was down after hours, but Facebook posted big numbers and was up huge after the bell, and the S&P and Nasdaq futures were also up again after the bell.



The S&P 500 / C-fund rallied strongly after the earnings and Fed stimuli and the chart poked its head above another key level of resistance, but settled right on it, and below the 200-day EMA. Here is the test I thought could happen, but it was a last case scenario since I thought the bear market was going to whack this down a long time ago. 2700 - 2705 are now the lines in the sand for the bears, although at the highs in November and December we did see false breakouts above the 200-day EMA before it broke down again, so that's always possible.




The DWCPF (small caps / S-fund) lagged a bit but had a great day, but it too is now getting close to its do or die area of resistance.




The dollar took a dive after the Fed's dovish policy statement, and that helped stocks and commodities move higher.




In the case of the EFA (EAFE Index / I-fund), the overseas markets were closed so they didn't react yet to the Fed's news, but the EFA was trading.




The High Yield Corporate Bond Fund has nearly reached the old highs already, which has been a dramatic move, but how will it react to the double top? Will it breakout and make new highs or do we see a double top pullback? The answer is key for the stock market's next move since it too (the S&P) is just below resistance.



What did I say yesterday about the AGG (Bonds / F-fund)? "I would think only a recession would push this over that 107 level for any length of time." I'm batting 1.000 lately, huh? Sheesh! I did say "any length of time" and a reverse on the day after a Fed meeting is possible, and I may save face a little if it does.





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Thanks for reading. We'll see you back here tomorrow.

Tom Crowley


Posted daily at www.tsptalk.com/comments.php

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Comments

  1. userque's Avatar
    FYI:

    [B]Fedís Powell says he will begin news conferences following each meeting starting in January[/B]
    [url]https://www.cnbc.com/2018/06/13/feds-powell-says-he-will-begin-press-conferences-following-each-meeting-starting-in-january.html[/url]

SPY (C Fund) (delayed)

(Stockcharts.com Real-time)
DWCPF (S Fund) (delayed)

(Stockcharts.com Real-time)
EFA (I Fund) (delayed)

(Stockcharts.com Real-time)
AGG (F Fund) (delayed)

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