On Friday stocks followed through on Thursday's big positive reversal day and closed with solid gains. The futures on Thursday night indicated that we would get a strong open, but when the better than expected jobs report was released, the rally went into another gear and the Dow closed up 209-points.
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The I-fund lagged because the jobs report sent the dollar soaring yet again, and when the dollar rallies over 1%, the I-fund is going to feel the pressure. Bonds and the F-fund were relatively flat.
If there's anything to be concerned about it might be that the indices could not get past their early afternoon peak. Perhaps it was because of the weekend coming, or perhaps - as you will see - the resistance in the charts may have produced some profit taking.
The SPY (S&P 500 / C-fund) reversed back up just in time to keep the chart above its longer-term rising support line. Those kangaroo tail reversals (red circle) can produce strong follow-through rallies and so far this one has not disappointed, but we have a double dose of resistance with the 50-day EMA and short-term descending resistance line. A true bottom / reversal should have no problem with this kind of resistance so we may know rather quickly where the market stands.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
For the fourth time in a row, theWilshire 4500 (S-Fund) may have reversed at the beginning of another month. It is still below the 200-day EMA so technically this one isn't out of trouble yet, so the reversal has some work to do. If it can get back above the 200-day EMA, perhaps the small caps will have the most room to run.
Chart provided courtesy of www.stockcharts.comm, analysis by TSP Talk
The chart of the Russell 2000 (small caps) is in bad shape after hitting correction mode earlier last week. But even bear markets can see big rallies and this has just been a 10% correction - not a bear market. There's warning flags, but as I said above, if the lows hold, the small caps could have a lot of upside potential.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Transportation Index fell sharply early last week because of weakness in the airline stocks. That was an emotional drop because of the Ebola scare. I like to buy emotional sell-offs and so far this looks like a typical reversal to an emotional sell-off. But there is resistance above and if the Ebola situation gets any worse, it could go straight back down.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE / I-fund) has been collapsing for weeks now, and Thursday's reversal didn't produce quite the gains that the U.S. indices experienced. It could be because Germany's DAX was closed on Friday and didn't have a chance to recover like the other European markets.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The dollar (UUP) has been relentless and every dip has been bought since the lows in late June. The UUP was up 1.32% on Friday and that helped keep the I-fund from a big day. I don't know how long this rising trend will continue, but when it ends, the I-fund will be a good place to be if you're in stocks. But when that will be, I don't know.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-fund) filled a large open gap (blue) last week then pulled back. We could be looking at a double top here, especially if stocks can continue to rally off their lows. The open gap (red) is now below the current level and I would expect that to get filled this week if stocks do move higher.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the Sentiment Survey Results and its TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
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The I-fund lagged because the jobs report sent the dollar soaring yet again, and when the dollar rallies over 1%, the I-fund is going to feel the pressure. Bonds and the F-fund were relatively flat.
If there's anything to be concerned about it might be that the indices could not get past their early afternoon peak. Perhaps it was because of the weekend coming, or perhaps - as you will see - the resistance in the charts may have produced some profit taking.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
For the fourth time in a row, theWilshire 4500 (S-Fund) may have reversed at the beginning of another month. It is still below the 200-day EMA so technically this one isn't out of trouble yet, so the reversal has some work to do. If it can get back above the 200-day EMA, perhaps the small caps will have the most room to run.
Chart provided courtesy of www.stockcharts.comm, analysis by TSP Talk
The chart of the Russell 2000 (small caps) is in bad shape after hitting correction mode earlier last week. But even bear markets can see big rallies and this has just been a 10% correction - not a bear market. There's warning flags, but as I said above, if the lows hold, the small caps could have a lot of upside potential.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Transportation Index fell sharply early last week because of weakness in the airline stocks. That was an emotional drop because of the Ebola scare. I like to buy emotional sell-offs and so far this looks like a typical reversal to an emotional sell-off. But there is resistance above and if the Ebola situation gets any worse, it could go straight back down.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE / I-fund) has been collapsing for weeks now, and Thursday's reversal didn't produce quite the gains that the U.S. indices experienced. It could be because Germany's DAX was closed on Friday and didn't have a chance to recover like the other European markets.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The dollar (UUP) has been relentless and every dip has been bought since the lows in late June. The UUP was up 1.32% on Friday and that helped keep the I-fund from a big day. I don't know how long this rising trend will continue, but when it ends, the I-fund will be a good place to be if you're in stocks. But when that will be, I don't know.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-fund) filled a large open gap (blue) last week then pulled back. We could be looking at a double top here, especially if stocks can continue to rally off their lows. The open gap (red) is now below the current level and I would expect that to get filled this week if stocks do move higher.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the Sentiment Survey Results and its TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
