We got an almost perfect jobs report before the bell on Friday as far as not being too hot, and actually raising the unemployment rate, which is what the Fed wanted to see happen, but the initial bullish reaction faded at noon ET, and the Dow fell about 700-points off its highs to close down 338-points. That included a nearly 140-point rally off the lows in the final minutes of trading. So it was a rough day for the stock market and the bulls, who thought they had a big rally to end the week. Trading volume was light because of the 3-day weekend. Bonds were up and the dollar rallied late to close flat.
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I am sarcastically calling Friday the TSP special. Stocks rallied off the Goldilocks jobs report, sucking new money into the market. Then, just as the TSP transfer deadline hit at 12 noon ET, the rally peaked and it was straight down for the rest of the afternoon. The bad news for those who were buying into the TSP funds on Friday was, the upside momentum that you thought you were buying into, flipped over on you. The good news for those who bought into the TSP stock funds on Friday, you got a much better price than if the rally held.
The small caps are showing some life with a more modest loss on Friday, and the futures on Sunday, were up 2 to 3 times percentage-wise of that of the S&P 500 and Nasdaq respectively. Will that continue, is another story, but maybe a new trend starting? Perhaps, but as volatility picks up again, everything can turn on a dime.
The gain in the I-fund was more of a result of the U.S. market peaking and falling after the overseas markets had already closed. Normally the TSP will make a fair value adjustment, but instead it will probably be Tuesday's price that reflects Friday's afternoon weakness in the I-fund.
The dollar was flat after reversing a big morning loss, but that early weakness only served to clean up the chart and fill that gap left open on Thursday. There's no signs of weakness here in the dollar, which should concern the I-fund share holders.
The Yield on the 10-Year Treasury was down sharply with the report of the higher unemployment rate, and that almost filled Thursday's open gap. That may get filled today but right now the trend in yields remains up, and support will get tested again early this week.
The weekly chart of the S&P 500 shows the aftermath of the last three weeks after hitting resistance in a bear market. There is some support rising up off the June lows that could get tested this week, and maybe, just maybe we'll see an oversold bounce from there. The daily chart shows this support as well, although there are certainly lower levels that could come into play down the road. In bear markets you have to think in terms of oversold bounces and not bottoms. A bottom will eventually come, but not every rally is creating a bottom. So far the June low is a low, and not a bottom, until we start to see overhead resistance get taken out and / or, higher highs and that hasn't happened yet.
Another look at Apple and the "as goes Apple" theory that the market will follow, the bounce off of the 200-day EMA (blue) test flipped back over at the 200-day Simple moving average (orange.) So here is another big test for the tech giant near 155.
The action was awful on Friday and that likely took the already bearish sentiment from the masses to another level, which could be a good argument for another short-term relief rally. There's nothing yet showing that stocks are out of the woods yet, and it could be a long fall, but we will get the occasional rebound. The question is whether the relief rallies will be big enough to be playable with our limited TSP rules. Just like on Friday, you can get a big rally, but it may not hold into the close for you, and that's all that matters in our TSP - the close.
The seasonality chart for September is not very good compared to other months, but the next two weeks have a much better record than the second half of the month.
The next CPI report comes out on September 13 and the next Fed FOMC meeting is on the 20th and 21st.
Admin Note: Need a distraction? We started the 2022 NFL Survivor Pool and here's some info on how to get in. It's free, and very easy, and there are prizes for the top finishers. Pick one winner each week. Win, and you move on. Lose, and you're out. How many weeks can you last? Invite your friends if you want to compete with them. [More]
The S&P 500 (C-fund) failed to hold onto a big morning rally and instead it flipped over to retest Thursday lows before closing down over 1% on Friday. The negative reversal was the bad news. This may be grasping at straws but the good news is that the solid support near 3900 held again despite the dismal action. I don't have any reason to believe that the lows are in, but the recent 400 point drop in the S&P 500 over the last couple of week has been precipitous, and it is now quite oversold in the short-term. There's not a whole lot of options from here. We'll either see an oversold bounce, or one of those Monday morning crashes (in this case Tuesday because of the holiday.) Crashes are rare so it's not likely, but this is certainly the kind of environment from which they do tend to manifest.
The DWCPF (S-fund / small caps) is in a very similar situation, but as I mentioned above there was a little perceptible relative strength here compared to the large caps on Friday and in the Sunday futures (Monday hasn't opened yet as I write this.)
EFA was down 0.66% on Friday but they gave the I-fund a small gain, so that will likely get corrected early this week. The overseas markets were all closed when the rally in the U.S. markets stalled on Friday.
The BND (Bonds / F-fund) was up nicely and filled the open gap from Thursday, but it closed well off its highs. There is still a lot of support near Thursday's lows, so like stocks, this will either crash, or we could see a relief bounce after the one month decline. It depends if that support can hold.
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 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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I am sarcastically calling Friday the TSP special. Stocks rallied off the Goldilocks jobs report, sucking new money into the market. Then, just as the TSP transfer deadline hit at 12 noon ET, the rally peaked and it was straight down for the rest of the afternoon. The bad news for those who were buying into the TSP funds on Friday was, the upside momentum that you thought you were buying into, flipped over on you. The good news for those who bought into the TSP stock funds on Friday, you got a much better price than if the rally held.
The small caps are showing some life with a more modest loss on Friday, and the futures on Sunday, were up 2 to 3 times percentage-wise of that of the S&P 500 and Nasdaq respectively. Will that continue, is another story, but maybe a new trend starting? Perhaps, but as volatility picks up again, everything can turn on a dime.
The gain in the I-fund was more of a result of the U.S. market peaking and falling after the overseas markets had already closed. Normally the TSP will make a fair value adjustment, but instead it will probably be Tuesday's price that reflects Friday's afternoon weakness in the I-fund.
The dollar was flat after reversing a big morning loss, but that early weakness only served to clean up the chart and fill that gap left open on Thursday. There's no signs of weakness here in the dollar, which should concern the I-fund share holders.
The Yield on the 10-Year Treasury was down sharply with the report of the higher unemployment rate, and that almost filled Thursday's open gap. That may get filled today but right now the trend in yields remains up, and support will get tested again early this week.
The weekly chart of the S&P 500 shows the aftermath of the last three weeks after hitting resistance in a bear market. There is some support rising up off the June lows that could get tested this week, and maybe, just maybe we'll see an oversold bounce from there. The daily chart shows this support as well, although there are certainly lower levels that could come into play down the road. In bear markets you have to think in terms of oversold bounces and not bottoms. A bottom will eventually come, but not every rally is creating a bottom. So far the June low is a low, and not a bottom, until we start to see overhead resistance get taken out and / or, higher highs and that hasn't happened yet.
Another look at Apple and the "as goes Apple" theory that the market will follow, the bounce off of the 200-day EMA (blue) test flipped back over at the 200-day Simple moving average (orange.) So here is another big test for the tech giant near 155.
The action was awful on Friday and that likely took the already bearish sentiment from the masses to another level, which could be a good argument for another short-term relief rally. There's nothing yet showing that stocks are out of the woods yet, and it could be a long fall, but we will get the occasional rebound. The question is whether the relief rallies will be big enough to be playable with our limited TSP rules. Just like on Friday, you can get a big rally, but it may not hold into the close for you, and that's all that matters in our TSP - the close.
The seasonality chart for September is not very good compared to other months, but the next two weeks have a much better record than the second half of the month.
The next CPI report comes out on September 13 and the next Fed FOMC meeting is on the 20th and 21st.
Admin Note: Need a distraction? We started the 2022 NFL Survivor Pool and here's some info on how to get in. It's free, and very easy, and there are prizes for the top finishers. Pick one winner each week. Win, and you move on. Lose, and you're out. How many weeks can you last? Invite your friends if you want to compete with them. [More]
The S&P 500 (C-fund) failed to hold onto a big morning rally and instead it flipped over to retest Thursday lows before closing down over 1% on Friday. The negative reversal was the bad news. This may be grasping at straws but the good news is that the solid support near 3900 held again despite the dismal action. I don't have any reason to believe that the lows are in, but the recent 400 point drop in the S&P 500 over the last couple of week has been precipitous, and it is now quite oversold in the short-term. There's not a whole lot of options from here. We'll either see an oversold bounce, or one of those Monday morning crashes (in this case Tuesday because of the holiday.) Crashes are rare so it's not likely, but this is certainly the kind of environment from which they do tend to manifest.
The DWCPF (S-fund / small caps) is in a very similar situation, but as I mentioned above there was a little perceptible relative strength here compared to the large caps on Friday and in the Sunday futures (Monday hasn't opened yet as I write this.)
EFA was down 0.66% on Friday but they gave the I-fund a small gain, so that will likely get corrected early this week. The overseas markets were all closed when the rally in the U.S. markets stalled on Friday.
The BND (Bonds / F-fund) was up nicely and filled the open gap from Thursday, but it closed well off its highs. There is still a lot of support near Thursday's lows, so like stocks, this will either crash, or we could see a relief bounce after the one month decline. It depends if that support can hold.
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 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.
