Stocks chopped around quite a bit on Wednesday as the bulls and bears sparred, but eventually the bulls won the battle and the Dow ended the day with a gain of 67-points. We are seeing signs of a possibly extended market in the short-term, but there also seem to be many folks who find themselves underinvested, and as they put money to work it has kept the indices buoyant.
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The dollar slipped again and that gave a boost to many commodities including gold and oil, and it even has some positive impact on stocks or anything traded in dollar. The SPY (S&P 500 / C-Fund) posted modest gains again and it has now closed above the old resistance line for an important 3rd straight day. Technically, there isn't a lot to hate here except if you think it is overbought for now.
The DWCPF (S-fund) has closed above its breakout level for 6 straight days. It may be in need of a pause, but it remains in a narrow rising trading channel and the prior high resistance line could now act as support if that channel does break down.
The Dow Transportation Index had another nice day, but it did close off the highs and below some possible descending resistance. Two closes above the 200-day EMA is a good start, but it is not a confirmation yet.
The EFA (I-fund) posted a small gain, and the weakness in the dollar did not hurt. It looks primed to test the April high soon.
The dollar lost ground again but it did fill that small gap (red) that we mentioned the other day. In the short-term, the 800-pound gorilla in the room is that large open gap (blue) caused by last Friday's jobs report, and that could shake up oil and gold if it does get filled.
The price of oil moved above $51 a barrel with the help of the decline in the dollar.
The same for gold. This doesn't look like a safety play but rather a play on the dollar since the Fed is now likely to stay pat on interest rates at next week's FOMC meeting. July is another story, and that makes the June jobs report a major deal. It gets released on July 8, which is a week late because of the holiday weekend. I wonder if they can sit on that number for 8 days without leaking it?
The AGG (Bonds / F-fund) was up again, and like gold, the strength is probably not a safety play, but just a play on low yields after that jobs report. The economic data reports should be market movers between now and the June and July FOMC meetings.
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Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk - Market Commentary
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