Stocks were mixed for most of the day on Tuesday but another late surge pushed most indices into the green by the close. The Dow added 69-points and the S&P 500 closed at a new high again. Small caps and the Transports lagged posting losses on the day. Trading volume was very light, near the lowest of the year, and barring any major events, I'd expect more of the same today.
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Light volume trading does favor the bulls unless something unexpected happens when the indices can get pushed around because of the lack of liquidity. So, I don't expect much and the bulls may have an advantage today, unless something negative happens and in that case the bears could could take advantage of the lack of trading.
With trading volume very light and many traders already headed out on vacation, let's make this brief today (and on Friday) and enjoy some time off! We do get the jobs report on Friday and trading volume could pick up that day, but we probably won't get back to "normal" action until next week.
Rather than go over all of the charts, I'm going to talk briefly about oil and copper today, and the interesting correlation between the S&P 500 and the price of copper.
The June Jobs Report will come out early on Friday morning and estimates are looking for a gain of 160,000 jobs, an unemployment rate of 3.6%, and wage growth of 0.3%.
From www.tsp.gov: "Some financial markets will be closed on Thursday, July 4 in observance of the Independence Day holiday. The Thrift Savings Plan will also be closed. Transactions that would have been processed Thursday night (July 4) will be processed Friday night (July 5), at Friday's closing share prices."
The price of oil had recently rallied quite a bit off of the lows. It had become very oversold and then we got the incident with Iran, and that was enough to produce a strong relief rally. It stalled near the 200-day EMA for a few days and yesterday we got a turnaround Tuesday. The price plummeted nearly 5% and it looks like the descending trend may be resuming. The decline in oil prices in May contributed to the decline in stocks that month, and then we saw the rally in oil in June, pushing the S&P 500 back near the old highs. Now it's rolling over again.
The price of oil is a pretty good barometer of the health of the economy. Copper is also good indicator. And when the price of copper is diverging from the price of the S&P 500, it can be a warning sign.
This 5-year weekly chart shows some significant negative divergences between copper and the S&P 500. We got a couple of near 20% declines in the S&P 500 in late 2015 and another in early 2016. Both of those declines in the S&P 500 was preceded by a sharp decline in the price of copper. There was another decline in copper during the summer of 2018, but stocks did not start to rollover until October, but they certainly did roll over.
Copper has now been falling, and creating a bearish looking head and shoulders pattern, for most of this year, while the S&P 500 is now in record territory. How comfortable does that make you feel about stock prices?
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. Have a great holiday, and we'll see you back here on Friday for a brief update!
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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Light volume trading does favor the bulls unless something unexpected happens when the indices can get pushed around because of the lack of liquidity. So, I don't expect much and the bulls may have an advantage today, unless something negative happens and in that case the bears could could take advantage of the lack of trading.
With trading volume very light and many traders already headed out on vacation, let's make this brief today (and on Friday) and enjoy some time off! We do get the jobs report on Friday and trading volume could pick up that day, but we probably won't get back to "normal" action until next week.
Rather than go over all of the charts, I'm going to talk briefly about oil and copper today, and the interesting correlation between the S&P 500 and the price of copper.
The June Jobs Report will come out early on Friday morning and estimates are looking for a gain of 160,000 jobs, an unemployment rate of 3.6%, and wage growth of 0.3%.
From www.tsp.gov: "Some financial markets will be closed on Thursday, July 4 in observance of the Independence Day holiday. The Thrift Savings Plan will also be closed. Transactions that would have been processed Thursday night (July 4) will be processed Friday night (July 5), at Friday's closing share prices."
The price of oil had recently rallied quite a bit off of the lows. It had become very oversold and then we got the incident with Iran, and that was enough to produce a strong relief rally. It stalled near the 200-day EMA for a few days and yesterday we got a turnaround Tuesday. The price plummeted nearly 5% and it looks like the descending trend may be resuming. The decline in oil prices in May contributed to the decline in stocks that month, and then we saw the rally in oil in June, pushing the S&P 500 back near the old highs. Now it's rolling over again.
The price of oil is a pretty good barometer of the health of the economy. Copper is also good indicator. And when the price of copper is diverging from the price of the S&P 500, it can be a warning sign.
This 5-year weekly chart shows some significant negative divergences between copper and the S&P 500. We got a couple of near 20% declines in the S&P 500 in late 2015 and another in early 2016. Both of those declines in the S&P 500 was preceded by a sharp decline in the price of copper. There was another decline in copper during the summer of 2018, but stocks did not start to rollover until October, but they certainly did roll over.
Copper has now been falling, and creating a bearish looking head and shoulders pattern, for most of this year, while the S&P 500 is now in record territory. How comfortable does that make you feel about stock prices?
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. Have a great holiday, and we'll see you back here on Friday for a brief update!
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.
