06/10/13
Despite an uptick in the unemployment rate to 7.6%, the number of private sector jobs created in May turned out to be just what Wall Street wanted to hear. They are calling it the Goldilocks report - just right. I've called it the sweat spot. The Dow gained 207-points on the news.
[TABLE="width: 88%, align: center"]
[TR]
[TD]
[/TD]
[TD="align: center"]Daily TSP Funds Return[TABLE="width: 151"]
[TR]
[TD]G-Fund:[/TD]
[TD="align: right"]+0.0050%[/TD]
[/TR]
[TR]
[TD]F-fund:[/TD]
[TD="align: right"]-0.33%[/TD]
[/TR]
[TR]
[TD]C-fund:[/TD]
[TD="align: right"]+1.28%[/TD]
[/TR]
[TR]
[TD]S-fund:[/TD]
[TD="align: right"]+0.97%[/TD]
[/TR]
[TR]
[TD]I-fund:[/TD]
[TD="align: right"]+0.83%[/TD]
[/TR]
[/TABLE]
[TABLE="width: 80%, align: center"]
[TR]
[TD="align: right"]More returns[/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The May jobs report came in with a gain of 175,000 jobs; modestly higher than expected showing continued growth, but not too high that Wall Street would be concerned that the Fed would end the bond buying spree. And the bump up to 7.6% in the unemployment rate confirmed the deal as it's still too high for the Fed to let the market breath on its own. Silly, but investors have come to depend on this intravenous tube to sustain the rally, and this report gave them some comfort that it isn't going away any time soon... At least that's what they hope.
The S&P 500 has now bounced off of the 50-day EMA - which is what you would expect in a bull market, and it is back above the 20-day EMA. It is now dealing with some short-term descending resistance, but that's not very strong resistance at this point.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The longer-term chart looks almost too good to be true, which as investors we have come to be on the lookout for the unexpected when things look too obvious.
The bottom of the rising intermediate term trading channel (red) provided support for the pullback last week, and the top of the longer trading channel (black) may have helped provide even more support. Combined with the 50-day EMA holding and a favorable jobs report, we saw a strong 2-day rebound.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The small caps of the Russell 2000 are in a similar situation where the ETF found support at the 50-day EMA, but the recent short-term pullback produced a descending channel and that will likely be tested early this week
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Ditto for the market leading Dow Transportation Index.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Last week we mentioned how bearish investors had gotten in the sentiment surveys - both our survey and the AAII survey. That preceded a very nice positive reversal day on Thursday, and of course the 207-point rally on Friday.
The smart and dumb money put / call ratios are also telling a very bullish story. The CBOE dumb money is getting quite bearish and the ratio fell below the 1.05 level on the chart (higher in number) while the smart money put / call ratio is above (lower in number) the 1.25 level suggesting the smart money is quite bullish.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The four other times this has happened in the last three years, the market bottomed and took off on at least a short-term rally, and in all cases the market never went below the low that was produced when those put / call ratios were hit at the same time.
OK, have you been convinced to mortgage your home and buy stocks at any price? It seems like a good plan and we shouldn't fight the trends, but nothing is ever as easy as it seems. Let's see if the S&P 500 can make it above the short-term resistance this week before doing anything too drastic because there is that one big wild card that could throw all of this bullish talk in the trash. The Fed.
The Fed has a meeting scheduled next week on June 18 - 19, and Chairman Ben Bernanke will give a press conference on the 19th. Any hint of them pulling the plug, or lightening up on the bond buying policy and everything may be thrown upside down. I'm not sure he would want to have that kind of an impact on the market so I'm sure he will be very measured with his words, but Wall Street will have to interpret it and if it doesn't sounds right, watch out!
There's is one short-term seasonal roadblock for the market over the next couple of days as today will be the 6th trading day in June.
Chart provided courtesy of www.sentimentrader.com
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.
Despite an uptick in the unemployment rate to 7.6%, the number of private sector jobs created in May turned out to be just what Wall Street wanted to hear. They are calling it the Goldilocks report - just right. I've called it the sweat spot. The Dow gained 207-points on the news.
[TABLE="width: 88%, align: center"]
[TR]
[TD]
[TD="align: center"]Daily TSP Funds Return[TABLE="width: 151"]
[TR]
[TD]G-Fund:[/TD]
[TD="align: right"]+0.0050%[/TD]
[/TR]
[TR]
[TD]F-fund:[/TD]
[TD="align: right"]-0.33%[/TD]
[/TR]
[TR]
[TD]C-fund:[/TD]
[TD="align: right"]+1.28%[/TD]
[/TR]
[TR]
[TD]S-fund:[/TD]
[TD="align: right"]+0.97%[/TD]
[/TR]
[TR]
[TD]I-fund:[/TD]
[TD="align: right"]+0.83%[/TD]
[/TR]
[/TABLE]
[TABLE="width: 80%, align: center"]
[TR]
[TD="align: right"]More returns[/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The May jobs report came in with a gain of 175,000 jobs; modestly higher than expected showing continued growth, but not too high that Wall Street would be concerned that the Fed would end the bond buying spree. And the bump up to 7.6% in the unemployment rate confirmed the deal as it's still too high for the Fed to let the market breath on its own. Silly, but investors have come to depend on this intravenous tube to sustain the rally, and this report gave them some comfort that it isn't going away any time soon... At least that's what they hope.
The S&P 500 has now bounced off of the 50-day EMA - which is what you would expect in a bull market, and it is back above the 20-day EMA. It is now dealing with some short-term descending resistance, but that's not very strong resistance at this point.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The longer-term chart looks almost too good to be true, which as investors we have come to be on the lookout for the unexpected when things look too obvious.
The bottom of the rising intermediate term trading channel (red) provided support for the pullback last week, and the top of the longer trading channel (black) may have helped provide even more support. Combined with the 50-day EMA holding and a favorable jobs report, we saw a strong 2-day rebound.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The small caps of the Russell 2000 are in a similar situation where the ETF found support at the 50-day EMA, but the recent short-term pullback produced a descending channel and that will likely be tested early this week
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Ditto for the market leading Dow Transportation Index.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Last week we mentioned how bearish investors had gotten in the sentiment surveys - both our survey and the AAII survey. That preceded a very nice positive reversal day on Thursday, and of course the 207-point rally on Friday.
The smart and dumb money put / call ratios are also telling a very bullish story. The CBOE dumb money is getting quite bearish and the ratio fell below the 1.05 level on the chart (higher in number) while the smart money put / call ratio is above (lower in number) the 1.25 level suggesting the smart money is quite bullish.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The four other times this has happened in the last three years, the market bottomed and took off on at least a short-term rally, and in all cases the market never went below the low that was produced when those put / call ratios were hit at the same time.
OK, have you been convinced to mortgage your home and buy stocks at any price? It seems like a good plan and we shouldn't fight the trends, but nothing is ever as easy as it seems. Let's see if the S&P 500 can make it above the short-term resistance this week before doing anything too drastic because there is that one big wild card that could throw all of this bullish talk in the trash. The Fed.
The Fed has a meeting scheduled next week on June 18 - 19, and Chairman Ben Bernanke will give a press conference on the 19th. Any hint of them pulling the plug, or lightening up on the bond buying policy and everything may be thrown upside down. I'm not sure he would want to have that kind of an impact on the market so I'm sure he will be very measured with his words, but Wall Street will have to interpret it and if it doesn't sounds right, watch out!
There's is one short-term seasonal roadblock for the market over the next couple of days as today will be the 6th trading day in June.
Chart provided courtesy of www.sentimentrader.com
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.
