Slow action favoring bulls

The light volume trading continued yesterday and probably will for the rest of the week, although Friday's jobs report could change that if there are any surprises. The indices were mixed as the Dow was flat, the S&P and Transports were up slightly, the Nasdaq had a big comeback day, and small caps were down.

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As we have been seeing lately, it is a sector by sector market and when some are up others are down. The big rally yesterday in the Nasdaq was impressive, but it remains in a downtrend below the 50-day EMA. On the other hand the small caps were down, but they still trade above the 20-day EMA and in a more bullish chart. The question is, will one take the other with it or can they continue to trend in different directions?

We get the June Jobs Report on Friday and estimates are looking for a gain of 173,000 jobs for the month, and an unemployment rate of 4.3%.


The SPY (S&P 500 / C-fund) opened higher but made a lower low compared to Monday's action, then closed fairly strong near the highs of the day. Volume was light so it's tough to trust the action no matter which direction, but the chart, which is in a slight downtrend right now, looks good since the reversal off the 50-day EMA. A test of the recent highs would go a long way otherwise the bears may eventually wake up.

The DWCPF (S-fund) was down 0.35% on the day but it closed off the lows and managed to bounce off the 20-day EMA once again. Support is rising and resistance looks tough near 1235 - 1240. Its coiling up for something, but which way will it break?

The Nasdaq 100 large tech stock index bounced back from recent selling but it remains below the 50-day EMA and in downtrend. IT is also in a possible falling wedge, which may be a bullish development if 5600 area can hold.

The Dow Transportation Index was up slightly on the day and it is resting on top of the March highs. Double tops tend to pullback before new highs are made, but so far this one has been able to hold up near those old highs.

The EFA (EAFE Index / I-fund) was up slightly but I am seeing these bear flags developing on some of the major European market charts. The FTSE has one, as does France's market, and the all important German DAX...

The AGG (bonds / F-fund) was up slightly continuing find support at the 50-day EMA after its recent pullback.

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Thanks for reading. We'll see you back here tomorrow.

Tom Crowley


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