Update: Jobs Report: +204,000 / unemployment rate 7.3%.
It was not a good day on Wall Street yesterday as the Dow lost 153-points and the damage was wide-spread. We saw losses between 1% and 2% on the day across the board, although bonds benefitted as investors looked for a place to park their cash.
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[TD="width: 80, align: right"] +0.0056%[/TD]
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[TD="width: 80, align: right"] +0.14%[/TD]
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[TD="width: 80, align: right"] -1.29%[/TD]
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[TD="width: 80, align: right"] -1.79%[/TD]
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[TD="width: 80, align: right"] -0.98%[/TD]
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The Twitter IPO took much of the headlines and it was a success, but underneath the surface there was some internal damage done and the charts are starting to show it.
The S&P 500 (SPY) actually made a brief new high in early trading but the gain was quickly erased and the 1.3% loss pulled it all the way down near the 20-day EMA for the first time since early October.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Dow also opened in new high territory, but the weak close created a bearish outside reversal day. The Dow had gained 129-points on Wednesday so Thursday's 153-point loss only produced a two-day loss of 24-points, but that masks the damage that was done to the broader indices.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Dow Transportation Index made a bearish outside reversal day on Wednesday, which was a warning sign, and it proceeded to drop 1.6% yesterday off of that reversal. It closed near the 20-day EMA but there is a small open gap on this IYT Transport ETF near 122.50. That could be the next target.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Despite the success in Twitter, the tech heavy Nasdaq was hit hardest yesterday losing close to 2% on the day. It fell through the 20-day EMA, filling an open gap along the way. Next stop - 50-day EMA like in October?
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The small caps of the Russell 2000 fell and held at the 50-day EMA. The next stop, should this decline continue, would be the rising support line.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds were the beneficiary of the sell-off in stocks and it couldn't have come soon enough as bonds were flirting with their support lines.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The October Jobs Report will be released this morning (Friday) so there is some ammunition for either a further decline, or a snap-back rally. Current estimates are looking for a gain of 100,000 jobs and an unemployment rate of 7.3%. With the Fed clearly at the backs of investors with their easing policy, you have to wonder if a bad jobs report would help the market than a good one. But with investors a little nervous now, it may give stocks a reason to sell-off regardless of the report's outcome.
Monday is a Federal Holiday and the TSP offices will not be processing transactions. Because of that I plan to take the day off myself, and if I do post a commentary, it will be very brief.
In today's TSP Talk Plus report we go over the NYSE overbought / oversold indicator, the AAII Sentiment Survey, and the TSP Talk Sentiment Survey results. 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 holiday weekend!
Tom Crowley
Posted daily at TSP Talk Market Commentary
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