A good start to the new month for stocks on Thursday as the Dow gained 131-points, and the S&P 500 had its 6th consecutive positive close. Small caps did well, while the Nasdaq was on the flat side. The dollar rallied again and bonds were flat. Some better than expected jobs data seemed to help the typically bullish first day of July.
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The July seasonality chart didn't disappoint as July 1st has such a great record. There are few times during the year when seasonality is perhaps more than just a secondary indicator, and early July is one of those times.
Chart provided courtesy of www.sentimentrader.com
If there was a reason not to be aggressive going into the new month it was because June, normally a weaker month, did well, and the S&P 500 had made 5 straight new all time highs leading into July 1, and there can be a tendency for the market to change direction when it is moving strongly in one direction at the end of the prior month. That obviously didn't happen and seasonality won the day.
Trading volume may dry up in the coming days surrounding the long holiday weekend, although with today being the release date of the June jobs report, that may not be the case. The June Jobs Report will be released at 8:30 AM ET this morning and the estimates are in the +700,000 jobs area, with an unemployment rate expected to be 5.7%.
We had a fairly strong initial jobless claims report come out yesterday and the market, which has been embracing weaker data because of the Fed's dovish considerations, didn't blink at the better than expected data.
We have a week or two before the bulk of the second quarter earnings reports start getting released, and the green in early July on the seasonality chart, followed by a series of red days in the second half of the month, is likely representing the typical buy the rumor, sell the news reaction, and expectations are very high this quarter so there is a good chance of disappointment.
The dollar continued its winning ways yesterday with another hefty gain pushing it to a multi-month high. That continues to put pressure on the I-fund, which was actually down 1.44% in June because of that rally in the dollar.
Copper is well off its May highs, and we know what's happened to lumber (down 56% from its May high) but one commodity has continued to do well despite the rise in the dollar, and that is oil, which hit 76.22 yesterday. It inched closer to the 2018 highs of 76.90, before pulling back from that intraday high and closing at a multi-year high of 75.23 a barrel.
Before that you'd have to go back to 2014 to see higher prices, and back then it was over $100. I've been wondering at what point this starts to negatively impact the consumer, and the stock market?
Message from tsp.gov: Holiday Closing. Some financial markets will be closed on Monday, July 5 in observance of the Independence Day holiday. The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (July 5) will be processed Tuesday night (July 6), at Tuesday's closing share prices.
The S&P 500 (C-fund) jumped to its 6th consecutive new high on Thursday with a solid 0.52% gain. It's in a narrow rising trading channel (blue), which is in a wider rising channel (red), which is within an even wider rising channel (orange.) It's closer to the tops of those channels so there's more room on the downside, but the bears have been hibernating for months so it may take a specific headline to change anything. The summer doldrums may keep things quiet, which generally favors the bulls, although we have a jobs report this morning, and 2nd quarter earnings coming in a couple of weeks, but will any of those be enough to interest the sleeping bears?
The DWCPF (S-fund) was up moderately, but more importantly, the mini-pullback found support at the prior high which is a good sign technically. Yesterday did have a seasonal advantage and the holiday weekend may keep that going, but again a disappointing jobs report could disrupt the quiet, positive action.
The EFA (I-fund) was up slightly as it tries to battle back from its recent pullback. As we saw up above, the dollar doesn't look like it's ready to rollover just yet so the I-find may continue to struggle until that changes. It's barely hanging onto the 50-day EMA for support.
The Transportation Index had a big day on Thursday but now it is contending with the 50-day EMA. We could consider this the top of that bear flag which has been developing, but another pop above 15,100 or so today could change that. The 100-day EMA has held again as support so far. This chart doesn't go back far enough to see, but this isn't the first time that average held as support.
BND (bonds / F-fund) was flat but it did come back from some earlier losses. It's hard to see on this longer-term chart but a small gap from Wednesday was filled before it reversed back up yesterday. The bottom of that large open gap from back in February continues to hold as resistance, but we expect gaps to get filled eventually.
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
To get weekly or daily notifications when we post new commentary, sign up HERE.
Thanks for reading. Have a great holiday weekend, and Happy Independence Day!
Tom Crowley
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 use additional methods and strategies to determine fund positions.
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[TD="width: 362, align: center"]
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The July seasonality chart didn't disappoint as July 1st has such a great record. There are few times during the year when seasonality is perhaps more than just a secondary indicator, and early July is one of those times.
Chart provided courtesy of www.sentimentrader.com
If there was a reason not to be aggressive going into the new month it was because June, normally a weaker month, did well, and the S&P 500 had made 5 straight new all time highs leading into July 1, and there can be a tendency for the market to change direction when it is moving strongly in one direction at the end of the prior month. That obviously didn't happen and seasonality won the day.
Trading volume may dry up in the coming days surrounding the long holiday weekend, although with today being the release date of the June jobs report, that may not be the case. The June Jobs Report will be released at 8:30 AM ET this morning and the estimates are in the +700,000 jobs area, with an unemployment rate expected to be 5.7%.
We had a fairly strong initial jobless claims report come out yesterday and the market, which has been embracing weaker data because of the Fed's dovish considerations, didn't blink at the better than expected data.
We have a week or two before the bulk of the second quarter earnings reports start getting released, and the green in early July on the seasonality chart, followed by a series of red days in the second half of the month, is likely representing the typical buy the rumor, sell the news reaction, and expectations are very high this quarter so there is a good chance of disappointment.
The dollar continued its winning ways yesterday with another hefty gain pushing it to a multi-month high. That continues to put pressure on the I-fund, which was actually down 1.44% in June because of that rally in the dollar.
Copper is well off its May highs, and we know what's happened to lumber (down 56% from its May high) but one commodity has continued to do well despite the rise in the dollar, and that is oil, which hit 76.22 yesterday. It inched closer to the 2018 highs of 76.90, before pulling back from that intraday high and closing at a multi-year high of 75.23 a barrel.
Before that you'd have to go back to 2014 to see higher prices, and back then it was over $100. I've been wondering at what point this starts to negatively impact the consumer, and the stock market?
Message from tsp.gov: Holiday Closing. Some financial markets will be closed on Monday, July 5 in observance of the Independence Day holiday. The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (July 5) will be processed Tuesday night (July 6), at Tuesday's closing share prices.
The S&P 500 (C-fund) jumped to its 6th consecutive new high on Thursday with a solid 0.52% gain. It's in a narrow rising trading channel (blue), which is in a wider rising channel (red), which is within an even wider rising channel (orange.) It's closer to the tops of those channels so there's more room on the downside, but the bears have been hibernating for months so it may take a specific headline to change anything. The summer doldrums may keep things quiet, which generally favors the bulls, although we have a jobs report this morning, and 2nd quarter earnings coming in a couple of weeks, but will any of those be enough to interest the sleeping bears?
The DWCPF (S-fund) was up moderately, but more importantly, the mini-pullback found support at the prior high which is a good sign technically. Yesterday did have a seasonal advantage and the holiday weekend may keep that going, but again a disappointing jobs report could disrupt the quiet, positive action.
The EFA (I-fund) was up slightly as it tries to battle back from its recent pullback. As we saw up above, the dollar doesn't look like it's ready to rollover just yet so the I-find may continue to struggle until that changes. It's barely hanging onto the 50-day EMA for support.
The Transportation Index had a big day on Thursday but now it is contending with the 50-day EMA. We could consider this the top of that bear flag which has been developing, but another pop above 15,100 or so today could change that. The 100-day EMA has held again as support so far. This chart doesn't go back far enough to see, but this isn't the first time that average held as support.
BND (bonds / F-fund) was flat but it did come back from some earlier losses. It's hard to see on this longer-term chart but a small gap from Wednesday was filled before it reversed back up yesterday. The bottom of that large open gap from back in February continues to hold as resistance, but we expect gaps to get filled eventually.
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
To get weekly or daily notifications when we post new commentary, sign up HERE.
Thanks for reading. Have a great holiday weekend, and Happy Independence Day!
Tom Crowley
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 use additional methods and strategies to determine fund positions.
