The losing ways continued for stocks on Friday as the Dow shed another 46-points. The jobs report came in line with estimates and that didn't seem to be enough for investors - just another excuse to sell. But there was some buying during afternoon trading and the close wasn't all that bad considering the red numbers.
[TABLE="width: 89%, align: center"]
[TR]
[TD="width: 180, align: center"]
[TD="width: 49, align: center"][/TD]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
Bonds were the winner on Friday gaining 0.23% on the day as the stock funds lost 0.3% - 0.4%.
As of 1:30 AM ET, the S&P 500 futures are up enough to erase Friday's losses so we'll see if that holds into Monday's open. Plus, China's Shanghai was up about 4% last I checked.
The SPY (S&P 500 / C-fund) was down again but it did close strong and the losses were modest. It briefly went below the 207 level that we have been watching, and started to bounce so perhaps the right shoulders is nearly completed. These "W" patterns within the shoulders have been interesting, but let's see if the theory holds.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The weekly chart shows the S&P is still above the 50-week moving average but the action has been basically sideways going back to late last year.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Looking at a long-term daily chart and the rounding appears a little more apparent. So far nothing is broken - except for maybe the Transportation Index - but clearly there's some possible long-term concerns. In the short-term, anything can happen, but the S&P 500 needs to make some new highs to push this rounded top pattern aside.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
And in the short-term we did see some positive reversals on the charts, which in the past have led to rallies.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Completion Index (S-fund) has been lagging and closed below the 200-day EMA for a second time (first one was in July.) In July it only lasted below the EMA for one close, so we'll see if buyers are looking to step up again as they did in July.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Transportation Index broke down from its second "F" flag last week after hitting and failing at the 200-day EMA. Although it is still descending, the old resistance line (black) may try to act as support here.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE index / I-fund) failed to hold above the 50-day EMA and also fell below the apex of the large pennant formation. Technically this is a break down, but let's give it a couple of days to try to repair itself as it also had a positive reversal. The 200-day EMA is below but that large gap is still not closed and it's a long way down if it decides to get filled.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (bonds / F-fund) was up on Friday and it remains above some key support. The mediocre jobs report may have bond investors believing there will not be a rate hike by the Fed next month. You would think the stock market would react positively to this analysis, but bond traders are usually a little more savvy. We may see the stock market pop on this theory this week. The weak economy is not great news, but it does mean rates will stay stubbornly low.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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! We'll see you back here tomorrow.
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.
