Stocks were mixed yesterday as the Dow lost a stiff 68-points, while small caps were slightly higher and other major indices somewhere in between. Bonds were down again. Better than expected economic data seemed to scare investors rather than embolden them.
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[TD="width: 80, align: right"] -0.43%[/TD]
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[TD="width: 80, align: right"] +0.03%[/TD]
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[TD="width: 80, align: right"] -0.31%[/TD]
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Both the GDP and the initial jobless claims reports came in better than expected yesterday and futures reacted negatively on the news and that rolled over into the trading day. Investors are still playing the "bad new is good news" game - worried more about the Fed's QE than the economy.
The S&P 500 (SPY) held at the 20-day EMA for a second straight day but tallied its 5th straight losing day in a row. The last time that happened was in mid-September where stocks continued to fall for another two weeks before bottoming.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Russell 2000 was up, also holding at the 20-day EMA. The lower end of the rising trading channel is still holding as well and as long as that holds, this chart looks bullish.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The dollar, which I said looks like it wants to breakout, broke down yesterday instead. Is this one of those wedge "fake-out" breakdowns that quickly reverse and break in the other direction? As I mentioned, the fundamentals would suggest more weakness because of the Fed, but it might rally in anticipation of QE tapering.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
While I liked the upside breakout possibility, the longer-term chart of the dollar ETF is clearly in a longer-term downtrend, so perhaps we should be expecting a more negative outcome from the dollar. The PMO indicator recently gave a sell signal.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds were down again yesterday and as long as the IEF 7 to 10 year bond fund is below that neckline, I would be bearish on bonds.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
This morning (Friday) we get the November jobs report. Estimates are looking for approximately 200,000 new jobs being created, and an unemployment rate of 7.2%. How investors react will be interesting. Do they want positive economic news, or bad? Either way, expect a big move the further the report comes in from estimates.
In today's TSP Talk Plus Report we go over the TSP Talk Sentiment Survey results, the short and intermediate-term indicators. 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 TSP Talk Market Commentary
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