Stocks opened higher on Friday after the mixed jobs report - fewer jobs created than expected, but a lower unemployment rate. It was also reacting to Apple and Amazon's earnings reports the from the Thursday evening's release after the bell. All was looking very good until about 1 PM ET when the wheels fell off. The losses weren't too big but from the early afternoon highs, stocks took quite a tumble. Apple was a drag on the three major large cap indices while small caps and the I-fund don't include Apple. Bonds rallied sharply on the miss on the jobs number, as yields declined.
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The July jobs report cane out showing 187,000 jobs created last month which was 13,000 short of estimates. The unemployment rate came in a tick lower than June's report which was also a tick lower than estimate of 3.6%.
The yield on the 10-year Treasury is still above 4% but it fell sharply after the release of the July jobs report. It fell below that double top area that we have been noting, but it remains above some other key support that could make or break the F-fund from here. If the yield holds above 4% and other support, the F-fund would likely flounder. A breakdown in yields will ignite a rally in the F-fund.
The dollar also tanked on the weaker than expected economic data, which is one reason why the I-fund outperformed on Friday. Another reason it led was because the negative reversal in the US market came well after the Asian and European markets had already closed.
The weekly chart of the S&P 500 shows that it was down for the week, but it is also still near the top of a trading channel, and at a longer term double or triple top. The chart could test some rising support in the 4450 area, but after that any further downside runs out of support until about 4290.
A check on the Fed balance sheet show a reduction of another $36 billion last week taking it to another new low for the year. This isn't necessarily bearish by itself, but liquidity and easy money are more favorable to the stock market than the opposite.
The Dow Transportation Index broke below a narrow rising trading channel last week, but the angle of incline was not going to be sustainable forever. The question is how much it might pullback. The one year chart below...
... shows just how steep the channel was, and how it is now hitting the top of a much larger trading channel.
The negative reversal on Friday is certainly eye opening and while we seem to see this often, it sure makes it tough on TSP participants who have to make decisions before noon ET. This one fooled me, and while I'm not sure if this negative outside reversal will turn out to be bearish for the the short-term, that is a typical tendency.
The very bullish early afternoon action in the S&P 500...
... turned into a much different looking, more bearish chart formation by the close.
The S&P 500 (C-fund) chart looks very interesting with open gaps above and below, and it fell through a couple of support lines while while closing on another. It's now below the 20-day EMA after Friday's failure to close back above it, and the 50-day EMA is still about 1.5% below the current level, but rising. The loss in Apple made this one of the lagging indices of the day.
DWCPF (S-fund) also posted a negative reversal day but it was not an outside reversal day as it remained above Thursday's low. There's an open gap and a rising support line in the 1820 area, which is just 10-points below Friday's close.
The one year chart of DWCPF is showing a key support area at last week's low which, for now, could just be a test of the old, long-term resistance line.
Like the small caps above, EFA (I-fund) also had a negative reversal day but not an outside reversal day. The dollar hit resistance last week and rolled over on the weak jobs numbers so if that puts a halt to the rally in the dollar, the I-fund could be a fund to watch as an outperformer. 28.5 is the area to watch. Below that helps the I-fund.
BND (Bonds / F-fund) gapped up on the weak economic data as yields came down sharply. A relief snap-back rally may have been due after the recent decline, but it is trading in a narrow descending trading channel, so the F-fund could be in a sell the rallies mode.
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
Daily Market Commentary Archives
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Thanks so much for reading! We'll see you back here tomorrow.
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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The July jobs report cane out showing 187,000 jobs created last month which was 13,000 short of estimates. The unemployment rate came in a tick lower than June's report which was also a tick lower than estimate of 3.6%.
The yield on the 10-year Treasury is still above 4% but it fell sharply after the release of the July jobs report. It fell below that double top area that we have been noting, but it remains above some other key support that could make or break the F-fund from here. If the yield holds above 4% and other support, the F-fund would likely flounder. A breakdown in yields will ignite a rally in the F-fund.
The dollar also tanked on the weaker than expected economic data, which is one reason why the I-fund outperformed on Friday. Another reason it led was because the negative reversal in the US market came well after the Asian and European markets had already closed.
The weekly chart of the S&P 500 shows that it was down for the week, but it is also still near the top of a trading channel, and at a longer term double or triple top. The chart could test some rising support in the 4450 area, but after that any further downside runs out of support until about 4290.
A check on the Fed balance sheet show a reduction of another $36 billion last week taking it to another new low for the year. This isn't necessarily bearish by itself, but liquidity and easy money are more favorable to the stock market than the opposite.
The Dow Transportation Index broke below a narrow rising trading channel last week, but the angle of incline was not going to be sustainable forever. The question is how much it might pullback. The one year chart below...
... shows just how steep the channel was, and how it is now hitting the top of a much larger trading channel.
The negative reversal on Friday is certainly eye opening and while we seem to see this often, it sure makes it tough on TSP participants who have to make decisions before noon ET. This one fooled me, and while I'm not sure if this negative outside reversal will turn out to be bearish for the the short-term, that is a typical tendency.
The very bullish early afternoon action in the S&P 500...
... turned into a much different looking, more bearish chart formation by the close.
The S&P 500 (C-fund) chart looks very interesting with open gaps above and below, and it fell through a couple of support lines while while closing on another. It's now below the 20-day EMA after Friday's failure to close back above it, and the 50-day EMA is still about 1.5% below the current level, but rising. The loss in Apple made this one of the lagging indices of the day.
DWCPF (S-fund) also posted a negative reversal day but it was not an outside reversal day as it remained above Thursday's low. There's an open gap and a rising support line in the 1820 area, which is just 10-points below Friday's close.
The one year chart of DWCPF is showing a key support area at last week's low which, for now, could just be a test of the old, long-term resistance line.
Like the small caps above, EFA (I-fund) also had a negative reversal day but not an outside reversal day. The dollar hit resistance last week and rolled over on the weak jobs numbers so if that puts a halt to the rally in the dollar, the I-fund could be a fund to watch as an outperformer. 28.5 is the area to watch. Below that helps the I-fund.
BND (Bonds / F-fund) gapped up on the weak economic data as yields came down sharply. A relief snap-back rally may have been due after the recent decline, but it is trading in a narrow descending trading channel, so the F-fund could be in a sell the rallies mode.
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
Daily Market Commentary Archives
To get weekly or daily notifications when we post new commentary, sign up HERE.
Thanks so much for reading! We'll see you back here tomorrow.
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.
