Stocks dropped sharply after the announcement of the Jobs report on Friday, which showed that 38,000 jobs were added in May. That was over 100,000 fewer than expected, while the unemployment rate fell to 4.7%. The Dow opened lower and was down nearly 150-points in the first hour of trading, but like the prior days last week, dip buyers showed up and we saw the indices close well off their lows, although still in negative territory as the Dow gave up 31.50. All three TSP stock funds ended with weekly gains.
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The S&P 500 (C-Fund) opened lower but strengthened into the close creating a positive reversal day despite the 0.30% loss. This chart has double top written all over it, but that doesn't mean any pullback will be deep. It's just normal action. With the positive reversal day there is a chance that it could challenge the recent highs again to start the week. Being above all three moving averages, it is still in a decent bullish position that the bears will need to overcome if they think the double top will be a peak.
The weekly chart of the S&P shows that we are still in the right shoulder of an inverted head and shoulders pattern. It could either breakout to the upside, as inverted H&S patterns tend to do, or it can pullback and consolidate within the shoulder a little longer, similar to what it did in the left shoulder.
The DWCPF (S-fund) flirted with the short-term rising support line and the support from the old resistance line from the old high, and both basically held.
The Dow Transportation Index was down very sharply on the jobs report data but it reversed strongly and created a reversal pattern. It is still below the 200-day EMA and now it is below the 20 and 50-day EMA's so it needs some help quickly.
The EFA is actually shaping up rather nicely in recent days with Friday's reversal which helped it close above the 200-day EMA for a 7th straight day after slipping below it in early trading on Friday. We already have a possible higher low and now it needs to get above 59.0 and eventually 60.0 to create a new rising trend.
Gold shot up on the jobs report as the report may help keep the Fed at bay, and low rates would be more inflationary than if they raised rates. So, there was a large gap up. It looks like a bullish move for gold, and it probably is, but in the short-term those open gaps on the GLD chart tend to get filled rather quickly so a pullback some time this week is very possible, but I think the dip buyers will be there near 117-116.
The AGG (Bonds / F-fund) gapped up on the jobs report with the dollar falling and pushing yields down. Yields go down when bond prices move up. That's a big gap that will surely garnish attention.
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 jobs number put stocks in an awkward situation because the Fed has said that they use the unemployment rate as a guide to determine rates, and 4.7% sounds like a strong economic figure, but clearly the number of people looking for jobs has been decreasing causing that number to decline, rather than a big jump in new jobs. The 38,000 jobs gained, along with negative revisions to prior months, shows some economic weakness and in reality, it may keep the Fed from raising in June. From a conspiracy angle, these weak numbers now could mean they are setting us up for some positive revisions as we get closer to the election.
The jobs report also sent the dollar falling and that pushed gold and other commodities higher.
The jobs report also sent the dollar falling and that pushed gold and other commodities higher.
The S&P 500 (C-Fund) opened lower but strengthened into the close creating a positive reversal day despite the 0.30% loss. This chart has double top written all over it, but that doesn't mean any pullback will be deep. It's just normal action. With the positive reversal day there is a chance that it could challenge the recent highs again to start the week. Being above all three moving averages, it is still in a decent bullish position that the bears will need to overcome if they think the double top will be a peak.
The weekly chart of the S&P shows that we are still in the right shoulder of an inverted head and shoulders pattern. It could either breakout to the upside, as inverted H&S patterns tend to do, or it can pullback and consolidate within the shoulder a little longer, similar to what it did in the left shoulder.
The DWCPF (S-fund) flirted with the short-term rising support line and the support from the old resistance line from the old high, and both basically held.
The Dow Transportation Index was down very sharply on the jobs report data but it reversed strongly and created a reversal pattern. It is still below the 200-day EMA and now it is below the 20 and 50-day EMA's so it needs some help quickly.
The EFA is actually shaping up rather nicely in recent days with Friday's reversal which helped it close above the 200-day EMA for a 7th straight day after slipping below it in early trading on Friday. We already have a possible higher low and now it needs to get above 59.0 and eventually 60.0 to create a new rising trend.
Gold shot up on the jobs report as the report may help keep the Fed at bay, and low rates would be more inflationary than if they raised rates. So, there was a large gap up. It looks like a bullish move for gold, and it probably is, but in the short-term those open gaps on the GLD chart tend to get filled rather quickly so a pullback some time this week is very possible, but I think the dip buyers will be there near 117-116.
The AGG (Bonds / F-fund) gapped up on the jobs report with the dollar falling and pushing yields down. Yields go down when bond prices move up. That's a big gap that will surely garnish attention.
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.
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.
