The non-farm payroll jobs report came in well below estimates on Friday, and stocks opened lower. By mid-morning buyers stepped up, the indices bottomed and rallied into the close. The Dow ended the day up 68-points pushing it into positive territory for the week.
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The I-fund lagged on Friday, but the late rally in U.S. stocks should help it today. Bonds closed slightly lower after giving up some early gains.
The SPY (S&P 500 / C-fund) made a new all-time closing high on Friday, but it sure hasn't felt very bullish out there. There seems to be a lot of tentativeness, but that isn't necessarily a bad thing. The S&P has moved sideways for over two-weeks now and that could be helping it refuel for another move higher. Either that or it is running out of steam, but the longer the sideways action continues, the more likely the next move will be up. Watch the 199 area. Volume has been picking up since the pre-holiday lull.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow has been consolidating just below the July highs for a couple of weeks, and this could either be an inverted head and shoulders pattern - which tends to be bullish, or it is tiring out like it did in July and making a double top. You'd have to give a bullish nod to this chart, but if the Dow falls below that consolidation box, that would lean it to the bearish side.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-Fund) broke down from its sharply ascending trading channel last week and we have to give that a warning flag, but it is still above the 20 and 50-day EMA's so it's hard to call this a bearish chart. This could qualify as a double top pullback, although there hasn't been all that much damage done.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Not surprisingly, the Russell 2000 (small caps) is in a similar situation as the Wilshire and on Friday the 20-day EMA survived a test. The rising trend is showing signs of cracking, but if the 20-day EMA holds, it should be OK.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-fund) filled that large open gap last week but has pulled back since. It did close well on Friday, pushing back above the 50-day EMA, and as I mentioned above, the I-fund didn't really get the benefits of that late rally in the U.S. indices on Friday so it should outperform the C and S funds today - price-wise.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The IEF (Bonds / F-fund) opened higher on Friday, but as stocks rallied, bonds came down, and the IEF is back down testing the old breakout area near 104. I suspect that open gap really wants to get filled, and it probably eventually will. It's just a matter of whether it will be sooner or later.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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