Stocks opened sharply lower on Friday morning after a weaker than expected jobs report, but when the notion that weak employment may ease inflation and interest rate talks sunk in, everything reversed to the upside. It was big day for the major indices as the Dow gained 332-points but trading volume was surprisingly light so the bulls have a little more to prove early this week as the charts hit resistance.
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The April Jobs Report came in light on Friday, almost 30,000 jobs fewer than estimated, but wage growth came in a little light as well and that helped ease inflationary pressure for a day and investors, who had been looking for a reason to sell, actually got a reason to buy as interest rate concerns subsided for a day. The unemployment rate ticked down to 3.9%, an historically low rate, so it was kind of a goldilocks report for the stock market.
Another help for the equity markets came from Warren Buffett who announced that he made another massive purchase of Apple's stock, and that helped the Nasdaq, the Dow, and the S&P 500, and gave investors a reason to be a little more optimistic, rather than focusing on those interest rates and bond yields.
The S&P 500 / C-fund spanned the space between the 200-day and 50-day EMA averages on Friday, closing just below the 50-day EMA. There is also a short-term descending resistance line (blue) near the 50-day EMA so that's the immediate test for the the S&P as we enter the new week. The bear flag (red) broke down a couple of weeks ago and hasn't reached its downside target, but there's also a possible bull flag there as well (blue).
The weekly chart of the S&P 500 shows a big positive weekly reversal bar, but it is also now testing the old support line from the rising trading channel that broke down months ago. The 2700 area may be a tough nut to crack.
The small caps / S-fund have outperformed, at least technically, as the bull flag broke out to the upside, and it closed back above the 50-day EMA. The higher lows we've seen just need a higher high to change this from a pennant formation into an uptrend again. 1370 and 1380 are the key levels to watch for that.
The Dow Transportation Index rallied up to the top of its descending trading channel with Friday's rally. Either the bottom of its trading range holds, or we'll have a major breakdown so it needs to giddy-up right here right now.
The EAFE / I-fund lagged with a minor gain on Friday, by comparison, and that's because of the recent strength in the dollar. Still, there is a bull flag formed and it's back above the 50-day EMA so the bulls have something on their side here.
The High Yield Corporate Bond Fund remains above some key support and the 50-day EMA but that could be a small bear flag that it is currently in so it's doing OK, but not out of the woods yet.
The Nasdaq 100 was given a gift on Friday when Warren Buffett announced that he had bought another 75 million shares of Apple. That gave the chart the boost it may have needed as it broke above its narrowing apex. Now there's more room overhead with little resistance until the gap gets filled near 171.
The AGG (Bonds / F-fund) was up slightly but still has some technical problems as it's in a bear flag and failing at the 20-day EMA. That said, bonds have been beaten down for so long that you'd have to expect some kind of relief rally eventually.
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. We'll see you back here tomorrow.
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.
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The April Jobs Report came in light on Friday, almost 30,000 jobs fewer than estimated, but wage growth came in a little light as well and that helped ease inflationary pressure for a day and investors, who had been looking for a reason to sell, actually got a reason to buy as interest rate concerns subsided for a day. The unemployment rate ticked down to 3.9%, an historically low rate, so it was kind of a goldilocks report for the stock market.
Another help for the equity markets came from Warren Buffett who announced that he made another massive purchase of Apple's stock, and that helped the Nasdaq, the Dow, and the S&P 500, and gave investors a reason to be a little more optimistic, rather than focusing on those interest rates and bond yields.
The S&P 500 / C-fund spanned the space between the 200-day and 50-day EMA averages on Friday, closing just below the 50-day EMA. There is also a short-term descending resistance line (blue) near the 50-day EMA so that's the immediate test for the the S&P as we enter the new week. The bear flag (red) broke down a couple of weeks ago and hasn't reached its downside target, but there's also a possible bull flag there as well (blue).
The weekly chart of the S&P 500 shows a big positive weekly reversal bar, but it is also now testing the old support line from the rising trading channel that broke down months ago. The 2700 area may be a tough nut to crack.
The small caps / S-fund have outperformed, at least technically, as the bull flag broke out to the upside, and it closed back above the 50-day EMA. The higher lows we've seen just need a higher high to change this from a pennant formation into an uptrend again. 1370 and 1380 are the key levels to watch for that.
The Dow Transportation Index rallied up to the top of its descending trading channel with Friday's rally. Either the bottom of its trading range holds, or we'll have a major breakdown so it needs to giddy-up right here right now.
The EAFE / I-fund lagged with a minor gain on Friday, by comparison, and that's because of the recent strength in the dollar. Still, there is a bull flag formed and it's back above the 50-day EMA so the bulls have something on their side here.
The High Yield Corporate Bond Fund remains above some key support and the 50-day EMA but that could be a small bear flag that it is currently in so it's doing OK, but not out of the woods yet.
The Nasdaq 100 was given a gift on Friday when Warren Buffett announced that he had bought another 75 million shares of Apple. That gave the chart the boost it may have needed as it broke above its narrowing apex. Now there's more room overhead with little resistance until the gap gets filled near 171.
The AGG (Bonds / F-fund) was up slightly but still has some technical problems as it's in a bear flag and failing at the 20-day EMA. That said, bonds have been beaten down for so long that you'd have to expect some kind of relief rally eventually.
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. We'll see you back here tomorrow.
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.
