09/09/13
Stocks were relatively flat on Friday by the close, but it was a volatile day. The Dow ended the day down 15-points but it was down 120 in early trading, and up over 70 in afternoon trading.
[TABLE="width: 80%, align: center"]
[TR]
[TD="width: 310"]
[/TD]
[TD="align: center"] Daily TSP Funds Return[TABLE="width: 166"]
[TR]
[TD="align: right"] G-Fund:[/TD]
[TD="align: right"] +0.0063%[/TD]
[/TR]
[TR]
[TD="align: right"] F-fund:[/TD]
[TD="align: right"] +0.24%[/TD]
[/TR]
[TR]
[TD="align: right"] C-fund:[/TD]
[TD="align: right"] +0.02%[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:[/TD]
[TD="align: right"] +0.16%[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:[/TD]
[TD="align: right"] +0.64%[/TD]
[/TR]
[/TABLE]
[TABLE="width: 69%, align: center"]
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The S&P 500 (SPY) has been sliding up on the underside on the old support line, which has been acting as resistance, but rising. But now it has reached the descending resistance of recent peaks, which will try to impede the S&P's attempt to fill that open gap. On Monday it will also try to close above the 50-day EMA for a 3rd straight day after closing below it for 6 straight days.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq is also testing overhead resistance but the bulls will hope that Friday's positive reversal day will give it the momentum it needs to break through. This leading index chart tested the 50-day EMA several times in August and held, so it's tough to get too bearish here, but how it handles resistance will be the key this week.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds had a nice day on Friday as the weak economic data sent yields lower and bond prices and the F-fund higher. Yields did close well off their lows which would normally mean a good chance of a positive follow through today, but the 10-year Treasury yield is close to some strong resistance.
In today's TSP Talk Plus report we'll go over a few more charts and take a look at oil and its impact on the S&P 500. 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 TSP Talk Market Commentary
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.
Stocks were relatively flat on Friday by the close, but it was a volatile day. The Dow ended the day down 15-points but it was down 120 in early trading, and up over 70 in afternoon trading.
[TABLE="width: 80%, align: center"]
[TR]
[TD="width: 310"]
[TD="align: center"] Daily TSP Funds Return[TABLE="width: 166"]
[TR]
[TD="align: right"] G-Fund:[/TD]
[TD="align: right"] +0.0063%[/TD]
[/TR]
[TR]
[TD="align: right"] F-fund:[/TD]
[TD="align: right"] +0.24%[/TD]
[/TR]
[TR]
[TD="align: right"] C-fund:[/TD]
[TD="align: right"] +0.02%[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:[/TD]
[TD="align: right"] +0.16%[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:[/TD]
[TD="align: right"] +0.64%[/TD]
[/TR]
[/TABLE]
[TABLE="width: 69%, align: center"]
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The jobs report was a disappointment with 169,000 being created in August, which was about 10,000 fewer than expected. There were also downward revisions made to both June and July's report cutting those numbers by a combined 74,000 jobs. The unemployment rate dropped to 7.3% but that was because 300,000 people stopped looking and left the workforce.
I posted this in the Weekly Wrap Up, but if you missed it, here a simple exaggerated example of why people dropping from the workforce lowers the unemployment rate. Suppose you have a total workforce consisting of 2 people. One is employed. The other is unemployed and looking for work. In this case the unemployment rate would be 50%. If that person who is unemployed gives up and decides they no longer want to look for work, they would be dropped from the workforce count and the new unemployment rate would be 0%. There's one person left in the workforce and they have a job.
This is why the drop in the unemployment rate did not really excite investors. Instead, the indices reacted by jumping around quite a bit as investors try to digest what this will mean to the Fed as they consider whether or not to taper their bond buying program. Weak economic data helps the non-taper argument, but nobody really wants that except the stock market.
This chart shows the beginning (green) and end (red) of easing programs and you can see that the stock market throws a little fit after the money is taken away. At least it did in 2010 and 2011.
I posted this in the Weekly Wrap Up, but if you missed it, here a simple exaggerated example of why people dropping from the workforce lowers the unemployment rate. Suppose you have a total workforce consisting of 2 people. One is employed. The other is unemployed and looking for work. In this case the unemployment rate would be 50%. If that person who is unemployed gives up and decides they no longer want to look for work, they would be dropped from the workforce count and the new unemployment rate would be 0%. There's one person left in the workforce and they have a job.
This is why the drop in the unemployment rate did not really excite investors. Instead, the indices reacted by jumping around quite a bit as investors try to digest what this will mean to the Fed as they consider whether or not to taper their bond buying program. Weak economic data helps the non-taper argument, but nobody really wants that except the stock market.
This chart shows the beginning (green) and end (red) of easing programs and you can see that the stock market throws a little fit after the money is taken away. At least it did in 2010 and 2011.
The S&P 500 (SPY) has been sliding up on the underside on the old support line, which has been acting as resistance, but rising. But now it has reached the descending resistance of recent peaks, which will try to impede the S&P's attempt to fill that open gap. On Monday it will also try to close above the 50-day EMA for a 3rd straight day after closing below it for 6 straight days.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq is also testing overhead resistance but the bulls will hope that Friday's positive reversal day will give it the momentum it needs to break through. This leading index chart tested the 50-day EMA several times in August and held, so it's tough to get too bearish here, but how it handles resistance will be the key this week.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds had a nice day on Friday as the weak economic data sent yields lower and bond prices and the F-fund higher. Yields did close well off their lows which would normally mean a good chance of a positive follow through today, but the 10-year Treasury yield is close to some strong resistance.
In today's TSP Talk Plus report we'll go over a few more charts and take a look at oil and its impact on the S&P 500. 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 TSP Talk Market Commentary
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.
