TSP Talk Blog

Stocks blasted off and gained back most, if not all of Wednesday's sell off losses. This market is looking for any reason to rally right now as we head into the strongest part of the year. Can it continue or are we all being lulled into a state of complacency? The Dow gained 240-points and the gains were well over 1% for the Nasdaq and small caps. Yields moved high so bonds were down.

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Amazon and Apple, which represent about 10% of the S&P 500, were both down about 4% in after hours trading yesterday after releasing disappointing earnings. Rare events indeed, but we shall see if this is just another opportunity for investors to buy a minor bargain.

Apple was trading down to 148, which took it all the way back to where it was trading... on Wednesday.

Amazon was down and traded at 3320 after hours, which it hasn't seen since... Monday! Nooo! Devastating!

Sarcasm aside, these were big misses in comparison to "typical" Apple and Amazon reports but clearly the selling isn't even newsworthy based on the price movement.

The question is whether the rest of the market reacts as well because both of these companies were blaming supply chain issues, and if Apple can't get parts, who can? They said the supply chain issues cost them $6 billion last quarter.

In the futures market there wasn't a whole lot of reaction outside of those two stocks, and the Russell 2000 small caps futures actually moved slightly higher afterhours, so I'm not sure what it will take to get a negative move in the market that doesn't last more than a few days.

Yes we had a decent pullback in September, but if the indices bounced right back in two weeks, did it really correct? GDP went from over 6.2% to 0.02% during that time yet stock prices are at all time highs.

Oil has gone from $35 this time last year, to $83, and the market isn't blinking... yet.



Inflation is a concern as prices in many items are soaring, but the market doesn't seem to mind.

Supply chain issues are slowing manufacturing / product production... no problem.

Impending debt ceiling deadlines and spending bills that can't get out of the negotiation phase. Yawn!

The Wall of Worry is being easily climbed.

The dollar got slammed yesterday, breaking down from that bear flag that we noted in Thursday's commentary. That certainly helped prices.




The yield on the 10-year Treasury bounced back but remains under the F-flag where it could find some resistance, although there is an open gap in the flag that it may try to tag.





When stocks are moving quickly in one direction or the other and the fundamentals aren't exactly telling the same story, it can be frustrating. But the market is always right on any given day and fighting it is swimming against the current. With just two IFTs per month there are plenty of days each month that the market will go against us. Not much we can do about that, except maybe complain a little, but that rarely helps.

It wouldn't surprise me, based on the flip flopping action in recent days, to see that kind of movement continue until investors, who are getting whipsawed, choose a direction, and it usually takes a few days for that to happen. However, this is the last trading day of the month, and the first day for November is on Monday and the bulls tend to have an advantage, although there is always the possibility of the "new month, new direction" phenomenon.

There is an FOMC meeting Tuesday and Wednesday of next week, and the tapering discussion could be a market mover, so investors could get tentative late this week and into next.

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The S&P 500 (C-fund) posted a new closing high, just as we thought we could be seeing a double top pullback starting. It could still happen and the news out of Amazon an Apple could be the ammunition, but if that doesn't cause the market to at least digest some of this recent rally's gains, I don't know what would.




The DWCPF (S-fund) got back most of Wednesday's losses, but in doing so it left that big gap still open, so I would find it tough to not look back at that if I were in the S-fund. The action didn't change the negative reversal day's trend, and the bears still have a chance to put the pressure on unless and until the bulls push this back to new highs, or even back above 2300 or so.




The EFA (I-fund) continues to grind higher and anytime we get a 0.60% gain in the dollar, as we did on Thursday, the I-fund is likely going to be happy. That narrow trading channel isn't quite an F-flag so it could grind higher for a while, although that peak on September 23 could act as resistance.




BND (Bonds / F-fund) slipped back below that 200-day EMA after failing at the 50-day EMA for a second time in two days. The top of that old resistance line is trying to act as support so it is in no man's land right now.




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

Tom Crowley




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