Stocks rallied hard on Tuesday. Percentage-wise it wasn't all that big of a day, but because we have gone so long without a 1% move in the major indices, it felt like an explosion. The Dow gained 129-points - well off the highs after coming within about a point of 17,000, but let's call it what it was - a very good day for stocks.
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Investors chose stocks over bonds as we saw bonds get hit yesterday. The F-fund lost 0.27%. The I-fund came inline with U.S. stocks, so the falling dollar hasn't been bolstering it as I thought it might.
The SPY (S&P 500 / C-fund) rallied strongly to post new highs. Not to make light of it, but the gain was "just" +0.67%. Good, but certainly nothing spectacular. It's just that volatility has been so low lately that a triple digit move in the Dow makes the big headlines these days. And with the Dow coming within 1.30 of 17,000, the media was in a frenzy yesterday.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
There was a bit of a weak close causing some possible reversal bars on the charts and some, but not all have triggered short-term weakness. But it was another new high in a series of higher highs and higher lows. Sounds like an uptrend in a bull market. Volume was on the light-side being a holiday week, and we've talked about the possibility of post-holiday reversals.
The gain on Tuesday was the largest to start a 3rd Quarter (or July) since 2011. We're in a different market environment now then we were then, but look what happened in 2011 after the big July 1st gains...
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Russell 2000 finally topped the March highs, although the weaker late action saw it fall below those highs by the close. Yesterday's strong open also created an open gap near 1194.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) made a new high and the S-fund keeps on rolling. The rising trend is intact after breaking out above the March highs last week.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The dollar continues to decline and it has now nearly filled the large open gap we have been watching. Unfortunately for those in the I-fund, this weakness hasn't help it outperform the U.S. TSP funds as I suggested.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Bonds were down sharply as we finally saw investors sell bonds to buy stocks. The downside action created an open gap that should get filled rather quickly, but the concern here, after resistance held, is that there may be a lower high being formed. Perhaps it will just remain within the rising parallel trading channel I drew below.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Instead of the normal Friday release, the June jobs report will be announced on Thursday this week, because of the holiday. Estimates are looking for a gain of about 210,000 non-farm payroll jobs, and an unemployment rate of 6.3%. We have a "Guess the jobs report" contest going on in the forum. Click here for more information.
The market will close at 1 PM ET on Thursday, and, per tsp.gov: Some financial markets will be closed on Friday, July 4th in observance of the Independence Day holiday. The Thrift Savings Plan will also be closed. Transactions that would have been processed Friday night (July 4th) will be processed Monday night (July 7th), at Monday's closing share prices.
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.
