Welcome to August. It was a tale of two half days of trading on Thursday as the early trading brought a rebound big enough to recoup virtual all of the losses from the Fed triggered sell-off on Wednesday. But a tweet from the President regarding new tariffs on China turned it all around. The Dow lost 281-points, a nearly 600-point swing, while the S&P 500 and Nasdaq are now both on a 4-day losing streak.
[TABLE="align: center"]
[TR]
[TD="align: center"] Daily TSP Funds Return
[TABLE="align: center"]
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[TD][/TD]
[TD="align: center"]
[/TD]
[/TR]
[/TABLE]
What happened yesterday may not be all related to the tweet. There was some resistance near the recent highs and the market was overdue for some find of consolidation at the least, or a pullback to digest the big gains we saw in June and July, and the tweet after the disappointment from the Fed was a good enough excuse. The early rally on Thursday had no real reason behind except for the typical fear of missing out dip buyers once the indices started to move higher in early trading. But the market was likely ready for this kind of action, and anyone who bought on Thursday morning had to pay the price for being overly complacent.
That said, the tweet about the Chinese tariffs may have an impact on the economy if nothing new is established in those negotiations, and because of that we saw the price of oil tank, as did bond yields with the 10-year Treasury yield closing closing below 2% at 1.87%...
Which is the lowest yield since before the 2016 presidential election.
Now the stock index charts are at some interesting pivot points where the 50-day EMA is being tested on some, and support lines in others, so the market is at a make or break level. So again... welcome to August trading.
We'll get the July jobs report on this morning (Friday). Estimates are looking for a gain of about 160,000 - 185-000 jobs, an unemployment rate of 3.6%, and wage growth of 0.3%.
The S&P 500 (C-fund) moved lower on the day after the strong early rally failed Thursday morning. It had gotten a stone's throw away from testing those recent all time highs before the rug was pulled out from under the bulls. The chart shows that the open gap that we have been watching has finally been filled (red), and the 50-day EMA is being tested. It looks like a make or break area with that other gap still open near 2900 and the 100-day EMA.
The DWCPF (S-fund) was down sharply and the losses gave back very close to all of the nice gains from July. The rising wedge broke down (red) and the 50-day EMA is being tested.
The price of oil plummeted on the tariff news, and that small head and shoulder pattern that we had mentioned recently, has now broken down. There is some descending support near yesterday's lows, but the H&S downside target suggests it may want to test the June lows.
The Dow Transportation Index did not take the tariff news well but it did hold at the 200-day EMA and it's trying to stay within its two-month long rising trading channel.
The dollar reversed course as well and the stiff losses helped out the I-fund some...
The EFA (I-fund) was down, but as I write this the I-fund price has not yet been posted for Thursday. My hunch is that it may get spared compared to the U.S. stock funds because of the late selling and the weakness in the dollar, but you never know what BlackRock will give us as a price or gain / loss on any given day. Since the overseas market trade overnight, it's their call ultimately.
AGG (Bonds / F-fund) moved sharply higher yesterday, up to new highs with yields selling off on the new Chinese tariffs.
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. Have a great weekend!
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.
[TABLE="align: center"]
[TR]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[TD][/TD]
[TD="align: center"]
[/TR]
[/TABLE]
What happened yesterday may not be all related to the tweet. There was some resistance near the recent highs and the market was overdue for some find of consolidation at the least, or a pullback to digest the big gains we saw in June and July, and the tweet after the disappointment from the Fed was a good enough excuse. The early rally on Thursday had no real reason behind except for the typical fear of missing out dip buyers once the indices started to move higher in early trading. But the market was likely ready for this kind of action, and anyone who bought on Thursday morning had to pay the price for being overly complacent.
That said, the tweet about the Chinese tariffs may have an impact on the economy if nothing new is established in those negotiations, and because of that we saw the price of oil tank, as did bond yields with the 10-year Treasury yield closing closing below 2% at 1.87%...
Which is the lowest yield since before the 2016 presidential election.
Now the stock index charts are at some interesting pivot points where the 50-day EMA is being tested on some, and support lines in others, so the market is at a make or break level. So again... welcome to August trading.
We'll get the July jobs report on this morning (Friday). Estimates are looking for a gain of about 160,000 - 185-000 jobs, an unemployment rate of 3.6%, and wage growth of 0.3%.
The S&P 500 (C-fund) moved lower on the day after the strong early rally failed Thursday morning. It had gotten a stone's throw away from testing those recent all time highs before the rug was pulled out from under the bulls. The chart shows that the open gap that we have been watching has finally been filled (red), and the 50-day EMA is being tested. It looks like a make or break area with that other gap still open near 2900 and the 100-day EMA.
The DWCPF (S-fund) was down sharply and the losses gave back very close to all of the nice gains from July. The rising wedge broke down (red) and the 50-day EMA is being tested.
The price of oil plummeted on the tariff news, and that small head and shoulder pattern that we had mentioned recently, has now broken down. There is some descending support near yesterday's lows, but the H&S downside target suggests it may want to test the June lows.
The Dow Transportation Index did not take the tariff news well but it did hold at the 200-day EMA and it's trying to stay within its two-month long rising trading channel.
The dollar reversed course as well and the stiff losses helped out the I-fund some...
The EFA (I-fund) was down, but as I write this the I-fund price has not yet been posted for Thursday. My hunch is that it may get spared compared to the U.S. stock funds because of the late selling and the weakness in the dollar, but you never know what BlackRock will give us as a price or gain / loss on any given day. Since the overseas market trade overnight, it's their call ultimately.
AGG (Bonds / F-fund) moved sharply higher yesterday, up to new highs with yields selling off on the new Chinese tariffs.
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. Have a great weekend!
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.
