The holiday shortened week was a very nice week for stocks, and the strong jobs report did not hurt. The jobs report came in with 288,000 jobs added in June, and an unemployment rate of 6.1%. The Dow gained 92-points on that news in Thursday's abbreviated trading session.
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Momentum in on the side of the bulls as we enter this week, but there is also the concern of a post-holiday reversal. I suspect there will be buyers in early trading after Joe and Jane Sixpack read their Sunday papers and saw how well stocks have been doing without them, but that's about the time that the market could take a breather as the dumb money is usually wrong at just the wrong time.
The SPY (S&P 500 / C-fund) broke above another rising wedge formation (blue), and the momentum seems relentless at this point. It seems a little too excessive and may be due for a pause here, but the rising trading channel (red) is still intact with room on the upside should stocks want to continue higher. The question is, would stepping in front of the momentum of this freight train be painful, or will the market take a break after rising all last week and basically for the last few months?
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
This data from sentimenTrader.com shows prior times when the S&P 500 made a new high just before a holiday closure since 2009. It has a negative bias but nothing extreme, and actually the average numbers after Independence Day were positive.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
The weekly chart of the S&P 500 shows the index could be testing some longer-term rising resistance.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) may be forming a little bullish flag here after July 1st's big rally peak. There is a negative reversal day kangaroo tail still hanging out there, which in the past has preceded some minor pullbacks during this recent leg higher.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The dollar was up big on the jobs report news on Thursday and the UUP created an open gap down near 21.33. It broke above the recent descending resistance line, but it stalled at the 50-day EMA. It had nearly filled the large open gap near 21.25 last week, but now there are two gaps either totally or partially open below the current level.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The move higher in the dollar helped hold the I-fund to a 0.27% gain on Thursday - about half of what U.S. stocks did. The overseas markets were open on Friday and they were mixed with not too much movement either way.
Bonds were down again on Thursday, but closed well off their lows. This IEF chart is in danger of creating an official downtrend, which will happen if it falls below the June 17 low. It's not official but it looks as if there will be of a lower high made. But even if that is the case, there are two small open gaps that may look to get filled before this chart breaks down.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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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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