It was a quiet, volatile day on Thursday - if those words can be used in the same sentence. Between 9:30 AM ET and about 2:15 PM, the indices were floating sideways. Then a quick drop, and sharp pop into the close put the end to a strange day. Yields were up but nothing serious, although small caps did lag on the higher yields. Small caps lagged while the I-fund kept pace with the S&P 500.
You can see the latest updated TSP share prices and returns, usually posted daily by 8:30 PM ET here: https://www.tsptalk.com/tsp_share_prices.php
Amazon reported earnings after the bell yesterday and it was down as much as 8% at one point, but it battled back as more information came out and as of this writing a few hours later, it was down about 5%. Information is still coming out but if it holds, it will have modest impact on the Nasdaq and S&P 500, but as we saw after some other Magnificent 7 earnings, the market is decoupling from the big tech stocks and behaving more broadly and a little healthier, rather than depending on a half dozen companies.
The January jobs report comes out before Friday's opening bell, and the estimates are looking for a gain of about 155K - 175K jobs. That's well below December's anomalous 256,000 jump. The unemployment rate could look funky as I understand they decided to adjust the US population in this report, which will skew the data as the labor force participation numbers will jump so the unemployment rate is likely to move up as well. Curious timing.
A jobs report that is a swing and a miss, or a homerun, could really impact the market, but to be honest, I'm not sure which way? We don't want anything too hot as it may impact the Fed's outlook on cutting interest rates, but we also don't want to see the economy imploding. Something inline or just a little cool or a little hot may work - no surprises, although if the unemployment rate jumps to 4.5% because of the population adjustment, we could see some funny knee-jerk reactions.
Another look at that late rally yesterday has me wondering what was up... Did someone leak the jobs data, did investors want in before this report, or was it Amazon related?
It's fishy because all of the major indices had been heading down and into the the red so it went from the lows of the day, to the highs of the day in the final 90 minutes of trading, and you wonder what they were reacting to. There was a story released about that time saying, "U.S. economy’s strength should outweigh tariff consequences, says Wells Fargo Investment Institute." Perhaps that was it?
What it did was move the S&P 500 from negative territory to a modest breakout of that bull flag that I have been drawing in, and here it is challenging the all-time highs again. That is certainly a bullish looking flag. The jobs report could have the power to break this out to the upside or repeat the prior patterns and go back to the bottom of the flag.
The weekly chart of the S&P 500 shows another successful test of the 20-week moving average this week. There were a couple of intra-week breakdowns, but basically every week since the end of 2023 it has closed at or above that moving average. The question is whether it's ready for a new leg higher, or maybe more sideways action instead as it trades near the early December high?
There was another story out yesterday quoting the new Treasury Secretary Bessent as saying the "benchmark the administration is using will be the 10-year Treasury, not the federal funds rate that the central bank controls."
The 10-year Treasury Yield ($TNX) broke down this week and now that breakdown level could be a key area of resistance, especially if today's jobs report comes in hot. A move back above 4.5% would not only hurt the bond market, but most likely the small caps as well.
I like the resilience of the recent stock market action in spite the recent tariff turmoil, but too much is riding on the jobs report to speculate further, and these reports are hardly accurate based on the massive revisions we have gotten in recent years. So it is just a side show with a hint of the potential direction of economic growth. I would say the reaction in yields will tell the story - not the actual number of jobs or the unemployment rate, but watch out for the knee-jerk reaction in the 10-year yield, especially if the unemployment rate is skewed to the upside because of that population adjustment.
DWCPF (S-fund) banged its head against the 2400 area again before pulling back again. This looks like a chart that wants to breakout, it just hasn't yet, and that large open gap near 2290 is still these when we look over our shoulders. Like most charts, I can see the jobs report either succeeding in pushing this above 2400, otherwise a test of the 50-day EMA or even the February 3rd low could be next instead.
ACWX (the I-fund tracking index) was up nicely yesterday, and it is making its way up to the previous highs. I don't know if the action since the move back above that blue 200-day average can be considered a completed right shoulder, or if it has to go back and fill it in more like the left shoulder, but that's an inverted head and shoulders pattern. They are typically bullish when it does break out, but as I have said many times, these are also considered continuation patterns, and the trend before the inverted H&S was down. There's a lot of coin flips out there.
BND (bonds / F-fund) pulled back slightly yesterday, and it is quickly testing the breakout line looking for support, although there is an open gap just below that. 72 has been strong support near that 50-day EMA, but there are now support levels above that.
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
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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 use additional methods and strategies to determine fund positions.
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You can see the latest updated TSP share prices and returns, usually posted daily by 8:30 PM ET here: https://www.tsptalk.com/tsp_share_prices.php
Amazon reported earnings after the bell yesterday and it was down as much as 8% at one point, but it battled back as more information came out and as of this writing a few hours later, it was down about 5%. Information is still coming out but if it holds, it will have modest impact on the Nasdaq and S&P 500, but as we saw after some other Magnificent 7 earnings, the market is decoupling from the big tech stocks and behaving more broadly and a little healthier, rather than depending on a half dozen companies.
The January jobs report comes out before Friday's opening bell, and the estimates are looking for a gain of about 155K - 175K jobs. That's well below December's anomalous 256,000 jump. The unemployment rate could look funky as I understand they decided to adjust the US population in this report, which will skew the data as the labor force participation numbers will jump so the unemployment rate is likely to move up as well. Curious timing.
A jobs report that is a swing and a miss, or a homerun, could really impact the market, but to be honest, I'm not sure which way? We don't want anything too hot as it may impact the Fed's outlook on cutting interest rates, but we also don't want to see the economy imploding. Something inline or just a little cool or a little hot may work - no surprises, although if the unemployment rate jumps to 4.5% because of the population adjustment, we could see some funny knee-jerk reactions.
Another look at that late rally yesterday has me wondering what was up... Did someone leak the jobs data, did investors want in before this report, or was it Amazon related?
It's fishy because all of the major indices had been heading down and into the the red so it went from the lows of the day, to the highs of the day in the final 90 minutes of trading, and you wonder what they were reacting to. There was a story released about that time saying, "U.S. economy’s strength should outweigh tariff consequences, says Wells Fargo Investment Institute." Perhaps that was it?
What it did was move the S&P 500 from negative territory to a modest breakout of that bull flag that I have been drawing in, and here it is challenging the all-time highs again. That is certainly a bullish looking flag. The jobs report could have the power to break this out to the upside or repeat the prior patterns and go back to the bottom of the flag.
The weekly chart of the S&P 500 shows another successful test of the 20-week moving average this week. There were a couple of intra-week breakdowns, but basically every week since the end of 2023 it has closed at or above that moving average. The question is whether it's ready for a new leg higher, or maybe more sideways action instead as it trades near the early December high?
There was another story out yesterday quoting the new Treasury Secretary Bessent as saying the "benchmark the administration is using will be the 10-year Treasury, not the federal funds rate that the central bank controls."
The 10-year Treasury Yield ($TNX) broke down this week and now that breakdown level could be a key area of resistance, especially if today's jobs report comes in hot. A move back above 4.5% would not only hurt the bond market, but most likely the small caps as well.
I like the resilience of the recent stock market action in spite the recent tariff turmoil, but too much is riding on the jobs report to speculate further, and these reports are hardly accurate based on the massive revisions we have gotten in recent years. So it is just a side show with a hint of the potential direction of economic growth. I would say the reaction in yields will tell the story - not the actual number of jobs or the unemployment rate, but watch out for the knee-jerk reaction in the 10-year yield, especially if the unemployment rate is skewed to the upside because of that population adjustment.
DWCPF (S-fund) banged its head against the 2400 area again before pulling back again. This looks like a chart that wants to breakout, it just hasn't yet, and that large open gap near 2290 is still these when we look over our shoulders. Like most charts, I can see the jobs report either succeeding in pushing this above 2400, otherwise a test of the 50-day EMA or even the February 3rd low could be next instead.
ACWX (the I-fund tracking index) was up nicely yesterday, and it is making its way up to the previous highs. I don't know if the action since the move back above that blue 200-day average can be considered a completed right shoulder, or if it has to go back and fill it in more like the left shoulder, but that's an inverted head and shoulders pattern. They are typically bullish when it does break out, but as I have said many times, these are also considered continuation patterns, and the trend before the inverted H&S was down. There's a lot of coin flips out there.
BND (bonds / F-fund) pulled back slightly yesterday, and it is quickly testing the breakout line looking for support, although there is an open gap just below that. 72 has been strong support near that 50-day EMA, but there are now support levels above that.
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 use additional methods and strategies to determine fund positions.
