Stocks opened sharply higher on Friday after the Goldilocks Jobs Report. 223,000 jobs were created in April and estimates were in the 115K to 230K range so hitting the middle was just right. The economy seems to be growing, but not at a pace that would warrant an imminent interest rate hike. The unemployment rate dropped to 5.4% and the participation rate ticked slightly higher so there was nothing there to keep investors from jumping in and embracing it.
[TABLE="align: center"]
[TR]
[TD="align: center"]
[TD="align: center"][/TD]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The Dow ended the day up 267-points while the indices all had solid days. The small caps continue to lag, possibly because of the recent decline in the dollar which makes multinational companies a little more attractive. The I-fund continues to perform well and bonds also rallied on the data.
The SPY (S&P 500 / C-fund) nearly closed at an all-time high but this area has been holding as resistance for some time. If someone is knocking on your door long enough they will either go away or you are going to have to let them in. So far the S&P has not gone away and here it is knocking on the door again. That big open gap is a concern since it will be a draw for any pullback, but this looks like it is ready to bust out and fly at some point this week.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The weekly chart is still rising with last week's bar testing the lower end but the positive reversal bar has it looking up again.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) has been lagging and Friday's modest gain did boost it back above the 50-day EMA. The long-term support line (red) held on Wednesday so perhaps it too is ready to start looking at new highs like the S&P. The falling wedge has broken to the upside, and that's a bullish formation.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
But it's not all bullish yet. The Russell 2000, which are the smaller stocks in our S-fund, did not make it above the 50-day EMA yet, and it has now close below that EMA for 7 straight days. It had similar trouble in January and it worked out OK so we'll see.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Transportation Index was up 0.57% on Friday but once again it closed well off the highs creating a negative reversal day pattern. It is struggling to get out of the right shoulder of the blue head and shoulders pattern that it has formed. It is possible that the H&S is completed having tested the top and bottom of the shoulder twice, but we'll have to see if that neckline support was a low. In a bull market H&S patterns are continuation patterns and generally bullish, but in a downtrend they are more likely to break down. Being that this one is coming off a drop from near 9200, it could be bearish, but technically it is still in a bull market so this isn't an easy call.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE index / I-fund) gapped up going from below the rising wedge formation to the top of the wedge. That's a big open gap sticking out there and nearly all of Friday's gains will have to be erased to fill it.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The dollar was up on Friday but only enough to fill the recently opened gap, and from there it started to drift lower again. That should be resistance and I'd expect the downside to resume, but there is another overhead gap that may look for some attention above 25.2.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
The AGG (bonds / F-fund) rallied on a Goldilocks jobs report. It wasn't too strong to warrant rate hikes so prices went up as yields fell down.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The yield on the 10-year Treasury is backing off from a recent double top although that 2.3% area has been holding even longer than that.
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 Sentiment Survey Results and 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 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.
