Stocks opened higher on Friday after the better than expected November jobs report was released. The unemployment rate remained at 5.8% but the number of jobs added was about 90,000 more than expected. The indices peaked around noon ET and it took a late spike higher to keep them from closing near the lows of the day. Still, the Dow ended with a gain of 59-points.
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The S-fund led the way with a 0.42% gain, and the I-fund picked up 0.11%. Bonds were down sharply on the strong economic data. The S&P 500 has been up for seven straight weeks.
The SPY (S&P 500 / C-fund) made another new high on Friday and the jobs report helped, but there was some selling during the latter half of the day and sometimes the market will peak just after a surprise report and digest the gains in the coming days. It may be a stretch but the prior peaks do have a similar feel to the current action and perhaps the long awaited right shoulder of the inverted head and shoulders pattern will start to form soon?
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) was up on Friday but remains below the overhead resistance line. Perhaps this will be resolved this week with a breakout, or a breakdown below that "weaker" rising support line. I'd say the bulls have the ball right now and it's their game to lose this week. The bears will have to pounce on any weakness, and they just haven't been able to do that lately.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Transportation Index, was up on Friday, but posted another kangaroo tail negative reversal day which means a good potential for some downside action on Monday, even if it is just intraday. The big problem for the Transports will be if it makes a lower high, but that won't officially occur until it falls below the December 1st low.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-fund) continues to float between the 50-day and the 200-day EMA's. A break in either direction could be a major tell for the direction of the next 5% or so move in the I-fund.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The German DAX, which looked like it had put in a nasty negative reversal on Thursday, actually reversed back up and had a big day on Friday, blasting out to new highs in the process. Once again we see bad news being forgotten very quickly.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The dollar's strength has been part of the reason for the I-fund being the only TSP fund in negative territory in 2014. The current rising wedge may be a hint that the dollar may be getting ready to peak, but it could still be a while.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-fund) made a lower high last week, but it is tough to make that call since we actually saw higher closing prices on the AGG last week than we saw back at the October highs. Those big black bars are all negative reversal days that closed much lower than their intraday highs. It is testing some key support now between about 109.15 and 109.60 and whether that holds will give us the story next week.
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
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.
