Stocks held up on Friday with some typical pre 4th of July positive action, although it closed off the intraday highs. The Dow gained 19-points while small caps, and particularly the I-fund, led the way. Last week's bounce-back from the Brexit vote seemed to be triggered by more stimulus talk.
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We have talked many times about the propensity for holiday reversals. That is, the action prior to a major holiday tends to back off from the major trend, only to see that major trend resume after the holiday. With the strength we saw last week, will we see some give back to start this week, or will the historically positive bias after Independence Day hold up?
Chart provided courtesy of www.sentimentrader.com
The June Jobs Report comes out on Friday and the estimates are looking for a gain of 170,000 jobs and an unemployment rate of 4.8%. The Jobs Report Contest is now open in the forum. Click here for more info.
The SPY (S&P 500 / C-Fund) ran up to some resistance early on Friday, and pulled back some creating a small reversal candlestick. It has come a long way in only a few days, but of course it was just recovering losses that were taken even more quickly. So it is back to where it was to start June and only slightly higher than the April and May highs, so there is some clear resistance in the area that the bears will probably try to defend this week. Whether the volatility will pick up enough to go back down to fill that large open gap remains to be seen, but that is a big gap.
The weekly chart of the S&P 500 shows the dramatic reversal last week as it hit a 4+ month low, then ran all the way back to test, and close near, recent highs. It looked like the inverted head and shoulders pattern was set to fail. Now it has another opportunity to breakout.
The DWCPF (S-fund) is also about to test some descending resistance, and it has yet to fill the open gap near 1045. This looks a little more vulnerable than the S&P 500 so it probably needs to make a move here soon or we'll see a new lower high cemented in. The fact that it is trading above the 50 and 200-day EMA's is a plus and perhaps shows it is not ready to rollover yet..
The Dow Transportation Index is also lagging, and that's not something you want to see from the market leader. It is stalling at resistance and unlike the S&P 500 and smalls caps, remains below the 50 and 200-day EMAs. There's not a lot of positives here except that it recaptured the trading channel, but it is a descending channel so it need a lot of help.
The EFA (I-fund) continues to be very volatile with the action overseas and in the currency markets. There's gaps all over as many European markets are faltering, even though the London FTSE, a big part of the I-fund, has performed very well since the Brexit vote.
The HYG High Yield Bond Fund made a new high on Friday before backing off slightly. Again, this is generally a positive sign for stocks.
The AGG (Bonds / F-fund) was up again as bond yields continue to drift lower. It is hitting some rising resistance right now, but how low can yields go? Well, with other countries offering negative yields on their similar bonds, perhaps our 10-Year Treasuries 1.46% yield can continue lower, which would mean higher prices for bonds. It doesn't usually work this way where stocks and bonds are rallying, but that's the environment we're in right now.
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the 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 www.tsptalk.com/comments.php
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 TSP stock funds had a big week with gains between 2.9% to 3.5%, and despite the big gains in stocks, bonds and the F-fund also had a 0.8% gain.We have talked many times about the propensity for holiday reversals. That is, the action prior to a major holiday tends to back off from the major trend, only to see that major trend resume after the holiday. With the strength we saw last week, will we see some give back to start this week, or will the historically positive bias after Independence Day hold up?
Chart provided courtesy of www.sentimentrader.com
The June Jobs Report comes out on Friday and the estimates are looking for a gain of 170,000 jobs and an unemployment rate of 4.8%. The Jobs Report Contest is now open in the forum. Click here for more info.
The SPY (S&P 500 / C-Fund) ran up to some resistance early on Friday, and pulled back some creating a small reversal candlestick. It has come a long way in only a few days, but of course it was just recovering losses that were taken even more quickly. So it is back to where it was to start June and only slightly higher than the April and May highs, so there is some clear resistance in the area that the bears will probably try to defend this week. Whether the volatility will pick up enough to go back down to fill that large open gap remains to be seen, but that is a big gap.
The weekly chart of the S&P 500 shows the dramatic reversal last week as it hit a 4+ month low, then ran all the way back to test, and close near, recent highs. It looked like the inverted head and shoulders pattern was set to fail. Now it has another opportunity to breakout.
The DWCPF (S-fund) is also about to test some descending resistance, and it has yet to fill the open gap near 1045. This looks a little more vulnerable than the S&P 500 so it probably needs to make a move here soon or we'll see a new lower high cemented in. The fact that it is trading above the 50 and 200-day EMA's is a plus and perhaps shows it is not ready to rollover yet..
The Dow Transportation Index is also lagging, and that's not something you want to see from the market leader. It is stalling at resistance and unlike the S&P 500 and smalls caps, remains below the 50 and 200-day EMAs. There's not a lot of positives here except that it recaptured the trading channel, but it is a descending channel so it need a lot of help.
The EFA (I-fund) continues to be very volatile with the action overseas and in the currency markets. There's gaps all over as many European markets are faltering, even though the London FTSE, a big part of the I-fund, has performed very well since the Brexit vote.
The HYG High Yield Bond Fund made a new high on Friday before backing off slightly. Again, this is generally a positive sign for stocks.
The AGG (Bonds / F-fund) was up again as bond yields continue to drift lower. It is hitting some rising resistance right now, but how low can yields go? Well, with other countries offering negative yields on their similar bonds, perhaps our 10-Year Treasuries 1.46% yield can continue lower, which would mean higher prices for bonds. It doesn't usually work this way where stocks and bonds are rallying, but that's the environment we're in right now.
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the 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 www.tsptalk.com/comments.php
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.
