Stocks sold-off sharply on Friday after the better than expected jobs report. The Dow lost 279-points, or 1.54%, as fear of a sooner than later interest rate hike from the Fed sent investors running. 295,000 jobs were created in February while the unemployment rate dropped to 5.5%. The next FOMC meeting is next week, March 17-18.
[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 I-fund held up better than the U.S. funds as the European leading German DAX was actually up on Friday, and France's CAC was flat. The threat of rate hikes hit the bond market hard and the F-fund lost 0.59%.
The SPY (S&P 500 / C-fund) dropped sharply, right through the 20-day EMA, after the jobs report was announced. It is resting on a strong area of support between about 206 and 207.50 where the 50-day EMA is crossing a couple of old highs. Should that break there is an open gap near 202.50, and that could be painful.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The PMO crossing below its moving average is not a good sign, but a spike in volume in recent months has triggered some short-term lows.
The S&P 500 is in the middle of the long-term ascending trading channel and if the downside continues the rising support line would be tested near about 2040 this week. By next week it would be close to 2050 - since it is rising. Of course it doesn't have to test it.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) fell through some key support so the warnings flags are out. If it doesn't turn around, the next levels of support are likely in the 1070-1080 area.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-fund) was down sharply, but the I-fund did a little better since the overseas markets were closed when much of the damage was done in the U.S. indices. The next levels of support would be at the bottom of the open gap and then the EMA's. While the rising trend has been broken, this index was due for a rest.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The dollar's strength will put pressure on the I-fund, and look what the strong jobs report did to the dollar on Friday.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The VIX (Volatility Index) moved above the 200-day EMA intraday on Friday, but settled below that key level by the close. If the market is going to bottom early this week we'll want to see it stay below.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-fund) broke down sharply below key support, the bear flag, and the head and shoulders pattern we drew up last week. It has already hit the H&S downside target, but that doesn't mean it has bottomed. It could try to fill the open gap although Friday's high could now be short-term resistance.
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.
