Stocks opened higher on Thursday, peaked at about 11 AM ET, then drifted sideways to lower the rest of the day. The gains were impressive but they lost about half of the intraday highs. Bonds rallied on... more weak economic data. The bond market is an enigma sometimes. Small caps kept pace with the S&P 500 while the I-fund lagged with the dollar rallying.
Apple and Amazon were both down between 2% and 4% in the initial after hours trading on Thursday after reporting earnings. Mag 7 stocks Microsoft and Meta led on the way up yesterday, but Apple and Amazon are two Magnificent 7 companies that may negatively impact the Dow, S&P 500 and Nasdaq meaningfully today - that is if the jobs report doesn't steal the show today.
The April jobs report will be out before the opening bell today (Friday) and estimates are looking for a gain of about 130,000 jobs and the unemployment rate is expected to be 4.2%.
Yesterday's rally was not all about Microsoft and Meta, but also potentially because the weekly jobless numbers came in higher than expected, and we know what that means. It's not great for those who may be out of a job but the Fed has been waiting for signs of the stubbornly hot labor market to cool off before cutting interest rates. Obviously today's jobs report will be another key catalyst and if you want lower rates, we probably don't want to see a big number today, although you never know how the market will react having been pricing in all kinds of scenarios recently.
So there's a lot riding on the jobs report and the reaction to the Mag 7 earnings, so it's difficult to speculate on the fundamental side, but the S&P 500 chart is still up against the stubborn 200-day EMA, and the small caps of the S-fund are stalling at the 50-day EMA. Add to that a possible peaking I-fund chart with the dollar trying to stabilize near its lows, and let's just say if stocks are higher a week from now, it will be an impressive statement. Otherwise, prepare for some possible consolidating in the short-term.
The S&P 500 (C-fund) moved above, but couldn't close above, the 200-day EMA yesterfay. It almost filled in the gap from the April 2nd close, "Liberation [tariff] Day", and now that the losses have basically been recouped from that April 3rd thru April 7 massacre, it wouldn't be unusual for investors to pocket some of that money. The bearish flag I drew in (blue) was broken to the upside, which is not typical, but with the futures lower on Thursday evening, the S&P will have some work to do to stay above that flag.
As I mentioned, DWCPF (S-fund) is not dealing with its 200-day average which is still almost 100 points overhead, but it failed to close above its 50-day EMA after a morning spike above it. We had been looking at 2100 as a possible target on the upside here but the 50-day average is still formidable resistance.
The reason these lines in the sand are important is because they are historically levels that bear markets have rallied to in the past, and failed. It's not necessarily saying that new lows are coming, but investors do tend to take profits at resistance after a big gain, so it could be just a temporary pause, or nothing at all. It's just an area that is considered a pivot point.
The 10-year Treasury Yield jumped yesterday back above 4.2% after a couple of days below that area, but once 4.3% was taken out on the downside, it could be the resistance for any rallyattempts. It has really been in a range between 4.1% and 4.4% for most of the last two and half months and it tested the lower end yesterday before rebounding.
The dollar broke above that small inverted head and shoulders pattern. I've been looking for the dollar to show signs of bottoming and while the inverted H&S pattern was bullish and expected to break to the upside, it's small enough that it doesn't necessarily mean bottom is in. I do feel like it's close to a low, and what would that mean? It could mean the I-fund's dominance may be over.
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!
ACWX (I-fund) was down yesterday, lagging the US stocks with the dollar up about 0.6% yesterday. It looks toppy to me right now, and a little pullback seems like a reasonable expectation after the massive rally.
The BND (F-fund) fell as yields rallied and that 73.25 area seems to have some kind of resistance going on. Again, this looks a little toppy but the jobs report could reshape the entire chart.
Thanks so much for reading! Have a great weekend!
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.
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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.
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Apple and Amazon were both down between 2% and 4% in the initial after hours trading on Thursday after reporting earnings. Mag 7 stocks Microsoft and Meta led on the way up yesterday, but Apple and Amazon are two Magnificent 7 companies that may negatively impact the Dow, S&P 500 and Nasdaq meaningfully today - that is if the jobs report doesn't steal the show today.
The April jobs report will be out before the opening bell today (Friday) and estimates are looking for a gain of about 130,000 jobs and the unemployment rate is expected to be 4.2%.
Yesterday's rally was not all about Microsoft and Meta, but also potentially because the weekly jobless numbers came in higher than expected, and we know what that means. It's not great for those who may be out of a job but the Fed has been waiting for signs of the stubbornly hot labor market to cool off before cutting interest rates. Obviously today's jobs report will be another key catalyst and if you want lower rates, we probably don't want to see a big number today, although you never know how the market will react having been pricing in all kinds of scenarios recently.
So there's a lot riding on the jobs report and the reaction to the Mag 7 earnings, so it's difficult to speculate on the fundamental side, but the S&P 500 chart is still up against the stubborn 200-day EMA, and the small caps of the S-fund are stalling at the 50-day EMA. Add to that a possible peaking I-fund chart with the dollar trying to stabilize near its lows, and let's just say if stocks are higher a week from now, it will be an impressive statement. Otherwise, prepare for some possible consolidating in the short-term.
The S&P 500 (C-fund) moved above, but couldn't close above, the 200-day EMA yesterfay. It almost filled in the gap from the April 2nd close, "Liberation [tariff] Day", and now that the losses have basically been recouped from that April 3rd thru April 7 massacre, it wouldn't be unusual for investors to pocket some of that money. The bearish flag I drew in (blue) was broken to the upside, which is not typical, but with the futures lower on Thursday evening, the S&P will have some work to do to stay above that flag.
As I mentioned, DWCPF (S-fund) is not dealing with its 200-day average which is still almost 100 points overhead, but it failed to close above its 50-day EMA after a morning spike above it. We had been looking at 2100 as a possible target on the upside here but the 50-day average is still formidable resistance.
The reason these lines in the sand are important is because they are historically levels that bear markets have rallied to in the past, and failed. It's not necessarily saying that new lows are coming, but investors do tend to take profits at resistance after a big gain, so it could be just a temporary pause, or nothing at all. It's just an area that is considered a pivot point.
The 10-year Treasury Yield jumped yesterday back above 4.2% after a couple of days below that area, but once 4.3% was taken out on the downside, it could be the resistance for any rallyattempts. It has really been in a range between 4.1% and 4.4% for most of the last two and half months and it tested the lower end yesterday before rebounding.
The dollar broke above that small inverted head and shoulders pattern. I've been looking for the dollar to show signs of bottoming and while the inverted H&S pattern was bullish and expected to break to the upside, it's small enough that it doesn't necessarily mean bottom is in. I do feel like it's close to a low, and what would that mean? It could mean the I-fund's dominance may be over.
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!
ACWX (I-fund) was down yesterday, lagging the US stocks with the dollar up about 0.6% yesterday. It looks toppy to me right now, and a little pullback seems like a reasonable expectation after the massive rally.
The BND (F-fund) fell as yields rallied and that 73.25 area seems to have some kind of resistance going on. Again, this looks a little toppy but the jobs report could reshape the entire chart.
Thanks so much for reading! Have a great weekend!
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.
