Stocks continued to move higher on Friday, cutting through layers of resistance with ease and the S&P 500 closed at its highest price since late March. The better than expected jobs report was a bullish catalyst as it beat estimates and stocks are now on the longest winning streak in 20 years. Yields were up on the strong economic data, leaving bonds and the F-fund down sharply, and taking a rate cut off the table for this week's meeting.
We came into Friday after Apple and Amazon reported disappointing earnings the night before and the futures were looking weak overnight, but the jobs report came in stronger than expected and the eight day winning streak for the S&P 500 turned into nine.
That reaction was a little surprising to me with the Fed's FOMC meeting this week and that report did little to justify an interest rate cut, and the the probability of a cut at this meeting is down to just 3%. Coincidentally the chances of no interest rate cuts coming by the September meeting is just 3% as well, so investors do expects the cuts to come; just not this week.
It was a blowout for the bulls with the NYSE issues and share volume more than 4 to 1 in favor of advancers over decliners. The Nasdaq was closer to 3 to 1. There were also more than twice the number of new 52-week highs than 52-lows made on Friday.
The S&P 500 (C-fund) has been moving up incrementally, breaking another level of resistance almost everyday. On Friday it was the 200-day EMA. The next roadblock is 5700 - the high on April 2nd which was the day the tariffs were started. Nine days in a row cannot go on, but what is going to happen during the next dip? Will the dip buyers continue to show up, or has the index come too far, too fast and in need of some more serious pullback? I'd love to see 5500 hold on any pullback.
Here's another major moving average, the 100-day EMA, going back a couple of years and there does seem to be some significance. It closed on Friday 9-points above it, but let's see how it reacts early this week before calling confirming this breakout.
The 10-year Treasury Yield popped higher on the hot jobs report, making it more obvious that the Fed is not likely to cut interest rates this week. Closing back above the 50 and 200-day averages as easily as it did was surprising as it was quite a jump from 4.12% to 4.32%. That could be a bull flag, which might mean yields are going higher. A breakout to the upside would put a lot of pressure on the F-fund. 4.3% is the place to watch now as the old support may try to act as resistance.
|
The dollar (UUP) was down on Friday but it battled back from a sharp early decline to close just modestly lower and keep the inverted head and shoulders pattern intact. I think there's more upside left in this chart, which could slowdown the I-fund.
The market leading Dow Transportation Index had a big day on Friday, gaining over 3% on the day and that put it above the descending resistance line, but there are still some headwinds near Friday's close and the 50-day average just overhead, but so far so good breaking the downtrend.
I expect the bears to make some kind of a move after the 9 day rally, but the bulls clearly have the momentum, so it may take a bad headline or a hawkish Fed statement on Wednesday to change the direction.
Other than the FOMC meeting, it's a light schedule for economic data this week, although we do get the ISM Services data today at 10 ET.
The April TSP Talk AutoTracker winners have been posted in the forum. Congratulations to NtvTxan for the incredible 12.85% gain last month, and the other top 5 finishers who all had double digit gains! Great job! This is why we do this. Get in on the action - it's free!
DWCPF (S-fund) is also testing its April 2nd high after a 350-point move off the lows in the last month. There's still a lot of overhead resistance but resistance has been getting cut through rather easily in recent days. The strength here is even more surprising given the fact that an interest rate cut seems unlikely this month.
ACWX (I-fund) gapped up to new highs as the dollar opened sharply lower on Friday, but the dollar did battle back late and this may be a little extended. I'd be surprised if this is a "gap and go" situation with the size of the recent rally and little consolidation over the last month. I'd expect that gap to get filled rather quickly, otherwise this gets dangerously stretched to the upside.
The BND (F-fund) was slammed on Friday as the bond market was blindsided by the strong jobs report. The rising support line was broken and that could mean trouble, however it would be odd for this to go too low if there's any signs of a recession out there.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
For more info our other premium services, please go here... www.tsptalk.com/premiums.php
To get weekly or daily notifications when we post new commentary, sign up HERE.
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 may use additional methods and strategies to determine fund positions.
| Daily TSP Funds Return
More returns |
We came into Friday after Apple and Amazon reported disappointing earnings the night before and the futures were looking weak overnight, but the jobs report came in stronger than expected and the eight day winning streak for the S&P 500 turned into nine.
That reaction was a little surprising to me with the Fed's FOMC meeting this week and that report did little to justify an interest rate cut, and the the probability of a cut at this meeting is down to just 3%. Coincidentally the chances of no interest rate cuts coming by the September meeting is just 3% as well, so investors do expects the cuts to come; just not this week.
It was a blowout for the bulls with the NYSE issues and share volume more than 4 to 1 in favor of advancers over decliners. The Nasdaq was closer to 3 to 1. There were also more than twice the number of new 52-week highs than 52-lows made on Friday.
The S&P 500 (C-fund) has been moving up incrementally, breaking another level of resistance almost everyday. On Friday it was the 200-day EMA. The next roadblock is 5700 - the high on April 2nd which was the day the tariffs were started. Nine days in a row cannot go on, but what is going to happen during the next dip? Will the dip buyers continue to show up, or has the index come too far, too fast and in need of some more serious pullback? I'd love to see 5500 hold on any pullback.
Here's another major moving average, the 100-day EMA, going back a couple of years and there does seem to be some significance. It closed on Friday 9-points above it, but let's see how it reacts early this week before calling confirming this breakout.
The 10-year Treasury Yield popped higher on the hot jobs report, making it more obvious that the Fed is not likely to cut interest rates this week. Closing back above the 50 and 200-day averages as easily as it did was surprising as it was quite a jump from 4.12% to 4.32%. That could be a bull flag, which might mean yields are going higher. A breakout to the upside would put a lot of pressure on the F-fund. 4.3% is the place to watch now as the old support may try to act as resistance.
The dollar (UUP) was down on Friday but it battled back from a sharp early decline to close just modestly lower and keep the inverted head and shoulders pattern intact. I think there's more upside left in this chart, which could slowdown the I-fund.
The market leading Dow Transportation Index had a big day on Friday, gaining over 3% on the day and that put it above the descending resistance line, but there are still some headwinds near Friday's close and the 50-day average just overhead, but so far so good breaking the downtrend.
I expect the bears to make some kind of a move after the 9 day rally, but the bulls clearly have the momentum, so it may take a bad headline or a hawkish Fed statement on Wednesday to change the direction.
Other than the FOMC meeting, it's a light schedule for economic data this week, although we do get the ISM Services data today at 10 ET.
The April TSP Talk AutoTracker winners have been posted in the forum. Congratulations to NtvTxan for the incredible 12.85% gain last month, and the other top 5 finishers who all had double digit gains! Great job! This is why we do this. Get in on the action - it's free!
DWCPF (S-fund) is also testing its April 2nd high after a 350-point move off the lows in the last month. There's still a lot of overhead resistance but resistance has been getting cut through rather easily in recent days. The strength here is even more surprising given the fact that an interest rate cut seems unlikely this month.
ACWX (I-fund) gapped up to new highs as the dollar opened sharply lower on Friday, but the dollar did battle back late and this may be a little extended. I'd be surprised if this is a "gap and go" situation with the size of the recent rally and little consolidation over the last month. I'd expect that gap to get filled rather quickly, otherwise this gets dangerously stretched to the upside.
The BND (F-fund) was slammed on Friday as the bond market was blindsided by the strong jobs report. The rising support line was broken and that could mean trouble, however it would be odd for this to go too low if there's any signs of a recession out there.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
For more info our other premium services, please go here... www.tsptalk.com/premiums.php
To get weekly or daily notifications when we post new commentary, sign up HERE.
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 may use additional methods and strategies to determine fund positions.
Last edited:
