Well, that's one way for investors to position themselves for Friday's important jobs report. We saw strong gains across the board on Thursday, particularly in small caps, which have been very volatile lately. The Dow gained 272-points and the back and forth continued as the Dow has not had back to back gains in two weeks. Bonds were down, the dollar was flat and despite a modest gain in oil yesterday, we've seen economically sensitive commodities deteriorate in price in recent weeks.
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[TD="align: center"] Daily TSP Funds Return
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[TD="align: right"][/TD]
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[TD]
[/TD]
[TD="align: center"]
[/TD]
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The Internal numbers were very positive with advancers easily outpacing decliners yesterday so the back and forth continued here as well. The one oddity was another triple digit number of new 52-week lows on the Nasdaq despite a new all time high for the index.
The action continues to be inconsistent with the S&P 500 and Nasdaq charts looking quite good in their moves to new highs, yet the indicators associated with those charts show some underlying issues. Still, price pays and if you've been invested, you're making money. If you are following the indicators, you're probably missing out.
The small caps have been interesting. The DWCPF, which the S-fund tracks, has also held up well, although it is currently testing a familiar resistance area now, but looking at the raw small caps index, the Russell 2000, there are some technical issues for sure. But I guess, who cares about the Russell, as far as the TSP goes, if the S-fund small caps are doing OK?
The yield on the 10-year Treasury rallied up to the descending resistance line and stopped, but still posted a nice gain, which meant modest losses for bonds / the F-fund.
I have been mentioning the dollar fairly regularly lately and it was flat yesterday but has been rallying since June 1. Whether it is because of that, or in conjunction with the strength in the dollar, we have seen the price of oil come down in recent weeks, along with the price of copper, and of course the price of lumber which has come down 70%, yes 70%, since the May high.
It had run up tremendously for months before that but it is actually down 25% since the start of the year, so it gave back all of those early 2021 gains, plus a whole lot more.
What this means exactly, I don't know, but with yields and commodities continuing to move lower, and even gold, which normally does well in inflationary conditions, is down 5% this year, it seems like every market except the stock market is bracing for economic weakness and possibly deflation.
So are the new highs in the major stock indices a smoke screen for what is really happening, and will a day of reckoning be inevitable? Or are companies actually doing really well because of stimulus, artificially low interest rates, and an explosion of the Fed's balance sheet?
A little follow up on the new meme stock, Robinhood (HOOD) - an online brokerage, which was up 50% on Wednesday. It was down 27% yesterday. I don't know what this means but perhaps it is just a sign of the crazy times we are in. The Dot Com bubble of 2000 seemed so much crazier, but I don't know if we'd ever go that far again.
The S&P 500 (C-fund) made a new closing high so no matter what kind of trouble we are seeing under the hood, this vehicle just keeps driving along, but it may be running on fumes at this point. The jobs report could trigger a big move in one direction or the other, but that direction does not always hold in the following days after an emotional headline.
After Wednesday's sell off in the small caps, the DWCPF (S-fund) rallied right back up to resistance on Thursday. What investors were seeing one day vs. the next is questionable, but at this point it feels more like program trading, and often that gets us leaning the wrong way.
The EFA / I-fund was up nicely and continues to hold above that sharply rising support line. That obviously can't last forever at that angle of incline, but the only obstacle in its way at this point is the June high.
The Dow Transportation Index rallied 1.3% yesterday after Wednesday's 2% plus decline. technically it is still in trouble, and like other economically sensitive indices and commodities, this one is still struggling.
The BND (bonds / F-fund) was down sharply as yield rallied. The reversal at the prior high is holding for now and a test of the top of the long rising trading channel could be in store in the coming days. Of course that would mean a rally in yields and they are near resistance them selves, so we'd have to see some kind of breakout or breakdown in that chart. Again, the jobs report could do that if it's really good, or really bad.
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 weekend!
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.
[TABLE="align: center"]
[TR]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[TD]
[/TD]
[TD="align: center"]
[/TR]
[/TABLE]
The Internal numbers were very positive with advancers easily outpacing decliners yesterday so the back and forth continued here as well. The one oddity was another triple digit number of new 52-week lows on the Nasdaq despite a new all time high for the index.
The action continues to be inconsistent with the S&P 500 and Nasdaq charts looking quite good in their moves to new highs, yet the indicators associated with those charts show some underlying issues. Still, price pays and if you've been invested, you're making money. If you are following the indicators, you're probably missing out.
The small caps have been interesting. The DWCPF, which the S-fund tracks, has also held up well, although it is currently testing a familiar resistance area now, but looking at the raw small caps index, the Russell 2000, there are some technical issues for sure. But I guess, who cares about the Russell, as far as the TSP goes, if the S-fund small caps are doing OK?
The yield on the 10-year Treasury rallied up to the descending resistance line and stopped, but still posted a nice gain, which meant modest losses for bonds / the F-fund.
I have been mentioning the dollar fairly regularly lately and it was flat yesterday but has been rallying since June 1. Whether it is because of that, or in conjunction with the strength in the dollar, we have seen the price of oil come down in recent weeks, along with the price of copper, and of course the price of lumber which has come down 70%, yes 70%, since the May high.
It had run up tremendously for months before that but it is actually down 25% since the start of the year, so it gave back all of those early 2021 gains, plus a whole lot more.
What this means exactly, I don't know, but with yields and commodities continuing to move lower, and even gold, which normally does well in inflationary conditions, is down 5% this year, it seems like every market except the stock market is bracing for economic weakness and possibly deflation.
So are the new highs in the major stock indices a smoke screen for what is really happening, and will a day of reckoning be inevitable? Or are companies actually doing really well because of stimulus, artificially low interest rates, and an explosion of the Fed's balance sheet?
A little follow up on the new meme stock, Robinhood (HOOD) - an online brokerage, which was up 50% on Wednesday. It was down 27% yesterday. I don't know what this means but perhaps it is just a sign of the crazy times we are in. The Dot Com bubble of 2000 seemed so much crazier, but I don't know if we'd ever go that far again.
The S&P 500 (C-fund) made a new closing high so no matter what kind of trouble we are seeing under the hood, this vehicle just keeps driving along, but it may be running on fumes at this point. The jobs report could trigger a big move in one direction or the other, but that direction does not always hold in the following days after an emotional headline.
After Wednesday's sell off in the small caps, the DWCPF (S-fund) rallied right back up to resistance on Thursday. What investors were seeing one day vs. the next is questionable, but at this point it feels more like program trading, and often that gets us leaning the wrong way.
The EFA / I-fund was up nicely and continues to hold above that sharply rising support line. That obviously can't last forever at that angle of incline, but the only obstacle in its way at this point is the June high.
The Dow Transportation Index rallied 1.3% yesterday after Wednesday's 2% plus decline. technically it is still in trouble, and like other economically sensitive indices and commodities, this one is still struggling.
The BND (bonds / F-fund) was down sharply as yield rallied. The reversal at the prior high is holding for now and a test of the top of the long rising trading channel could be in store in the coming days. Of course that would mean a rally in yields and they are near resistance them selves, so we'd have to see some kind of breakout or breakdown in that chart. Again, the jobs report could do that if it's really good, or really bad.
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 weekend!
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.
