Stocks rallied on Monday pricing in Friday's big jobs report. Sometimes a head fake when a rally is based off an emotional report like that, the indices held firm for most of the day, closing near their highs. With that behind us, will investors continue to pile in or will we start to see some profit taking with the indices getting stretched again? The Dow gained 374-points. Bonds were down, and small caps were up but lagged the larger indices.
[TABLE="align: center"]
[TR]
[TD="align: center"] Daily TSP Funds Return
[TABLE="align: center"]
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[TD]
[/TD]
[TD="width: 362, align: center"]
[/TD]
[/TR]
[/TABLE]
The market has been bullish, but choppy all year, and this recent push higher puts the indices closer to the top of their trading channels, so if there's going to be a continued choppy rally, we may be near a short-term peak, but certainly there are no signs that the bull market is about to end.
I would have expected the 10-year Treasury yield to rally on a strong jobs report such as we just had which was well above expectations, and it did initially on Monday, but for some reason it drifted lower as the day went on and closed down. That may have been what helped the small caps, which were actually flat to down for much of the day, to a late rally and get the S-fund into the green for the day.
Why the Nasdaq and FAANG stocks were so strong all day is interesting since it had been very yield sensitive, but they came out of the gate running, even when the yields were popping higher earlier, based on the strong economic data.
The energy sector was one of the losers on the day as oil prices fell, and that may have also contributed to the small caps lagging. On a day where the jobs report indicates good growth for the economy, it's a little surprising to see oil fall like that, and the chart is starting to look a little precarious as it hangs onto that 50-day EMA and the bearish looking flag. That doesn't seem right, but lower demand and higher supplies were to blame.
Internally the numbers were positive, but perhaps not quite as strong as you'd expect on a day with the major indices up well over 1% on the day. The NYSE advancing volume beat declining volume by just a 3 to 2 margin. And the Nasdaq, up 1.67%, was only 6 to 5 in favor of advancing volume.
With the jobs report behind us, investors will start looking toward the 1st quarter earnings reports to come out over the next 3 to 4 weeks, starting with the banks next week.
March Madness contest links: More Info. Yahoo! Tourney Pick'em. Winners will be posted here tomorrow, or in the forum later tonight.
The S&P 500 (C-fund) gapped up after the big job report on Friday, and it looks to be making a beeline for the top of that rising channel. We talked yesterday about how far the index is above its 200-week average, and of course the daily 200-day average. Yesterday only stretched that further. The question is whether momentum, which has been a huge driver of stocks since the 2020 lows, can overcome the overly stretched chart. The rally yesterday was bigger than I would have expected after that jobs report, but that pattern of new highs followed by a pullback is still intact.
The DWCPF (small caps / S-fund) lagged yesterday but rallied late to overcome some midday losses. Still, we've seen this type of candlestick before at prior peaks so I think the small caps need to step on the peddle to stay in the race.
The EFA (I-Fund) had a big day as the dollar fell 0.32%, giving this I-fund rally a boost. New highs and a double breakout is where it starts today.
The High Yield Corporate Bond Fund was up slightly as it ran into that double top after the huge rally of the recent lows. Does it need a rest here or is a breakout in the cards this week? A little basing handle here would make for a nice future cup and handle formation breakout, and may make the chart more stable.
The VIX (Volatility Index) was surprisingly higher yesterday as it moved up 3.6%, but it remained below 18 by the close. It could be a sign of slight complacency if investors don't see much of a reason to hedge their long positions anymore. We'll have to see how 19 and 20, recent support levels, now act if tested from below.
BND (bonds / F-fund) was off as yields rallied early, but slipped back late in the day. We still have a bear flag here, and it's back below the 20-day EMA after one close above it. As always, it looks due for a rally, but the chart still looks vulnerable.
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 notifications when we post new commentary, sign up HERE.
Thanks 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.
[TABLE="align: center"]
[TR]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[TD]
[/TD]
[TD="width: 362, align: center"]
[/TR]
[/TABLE]
The market has been bullish, but choppy all year, and this recent push higher puts the indices closer to the top of their trading channels, so if there's going to be a continued choppy rally, we may be near a short-term peak, but certainly there are no signs that the bull market is about to end.
I would have expected the 10-year Treasury yield to rally on a strong jobs report such as we just had which was well above expectations, and it did initially on Monday, but for some reason it drifted lower as the day went on and closed down. That may have been what helped the small caps, which were actually flat to down for much of the day, to a late rally and get the S-fund into the green for the day.
Why the Nasdaq and FAANG stocks were so strong all day is interesting since it had been very yield sensitive, but they came out of the gate running, even when the yields were popping higher earlier, based on the strong economic data.
The energy sector was one of the losers on the day as oil prices fell, and that may have also contributed to the small caps lagging. On a day where the jobs report indicates good growth for the economy, it's a little surprising to see oil fall like that, and the chart is starting to look a little precarious as it hangs onto that 50-day EMA and the bearish looking flag. That doesn't seem right, but lower demand and higher supplies were to blame.
Internally the numbers were positive, but perhaps not quite as strong as you'd expect on a day with the major indices up well over 1% on the day. The NYSE advancing volume beat declining volume by just a 3 to 2 margin. And the Nasdaq, up 1.67%, was only 6 to 5 in favor of advancing volume.
With the jobs report behind us, investors will start looking toward the 1st quarter earnings reports to come out over the next 3 to 4 weeks, starting with the banks next week.
March Madness contest links: More Info. Yahoo! Tourney Pick'em. Winners will be posted here tomorrow, or in the forum later tonight.
The S&P 500 (C-fund) gapped up after the big job report on Friday, and it looks to be making a beeline for the top of that rising channel. We talked yesterday about how far the index is above its 200-week average, and of course the daily 200-day average. Yesterday only stretched that further. The question is whether momentum, which has been a huge driver of stocks since the 2020 lows, can overcome the overly stretched chart. The rally yesterday was bigger than I would have expected after that jobs report, but that pattern of new highs followed by a pullback is still intact.
The DWCPF (small caps / S-fund) lagged yesterday but rallied late to overcome some midday losses. Still, we've seen this type of candlestick before at prior peaks so I think the small caps need to step on the peddle to stay in the race.
The EFA (I-Fund) had a big day as the dollar fell 0.32%, giving this I-fund rally a boost. New highs and a double breakout is where it starts today.
The High Yield Corporate Bond Fund was up slightly as it ran into that double top after the huge rally of the recent lows. Does it need a rest here or is a breakout in the cards this week? A little basing handle here would make for a nice future cup and handle formation breakout, and may make the chart more stable.
The VIX (Volatility Index) was surprisingly higher yesterday as it moved up 3.6%, but it remained below 18 by the close. It could be a sign of slight complacency if investors don't see much of a reason to hedge their long positions anymore. We'll have to see how 19 and 20, recent support levels, now act if tested from below.
BND (bonds / F-fund) was off as yields rallied early, but slipped back late in the day. We still have a bear flag here, and it's back below the 20-day EMA after one close above it. As always, it looks due for a rally, but the chart still looks vulnerable.
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 notifications when we post new commentary, sign up HERE.
Thanks 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.
