Stocks pulled back from Friday's big jobs report triggered gains. Nothing serious, but there are open gaps on the charts that are looking for attention, and investors appeased those gaps by taking some profits on Monday. The Dow lost 86-points on the day, and for a change, small caps outperformed the large caps.
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The I-fund was basically flat - probably payback for last Friday's short change on the gain. Bonds pulled back sharply.
The SPY (S&P 500 / C-fund) pushed into the open gap created on Friday - typical open gap action, but there is a lot more gap to get filled. Stocks can continue higher without filling the gap, but investors wouldn't want to be constantly looking over their shoulder at that gap as a potential pullback target, so we're probably better off seeing it get filled sooner than later. Take a look at how light the volume was compared to Friday's. The big money didn't seem to be involved on Monday.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) was off slightly on Monday but it lost some early gains producing a negative reversal day. It did close above the 50-day EMA but as we see in the chart above, there is a gap to fill on the major indices and small caps may also be pulled down in sympathy.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE index / I-fund) also pulled back into the large open gap and that's not a big surprise. The dollar was up and we'll be watching the rising support line and the bottom of the open gap for support should the pullback continue.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (bonds / F-fund) lost all of Friday's gains, and the decline pushed this bond ETF below some longer-term resistance. The dead-cat bounce ran out of steam rather quickly.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
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Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.php
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