Stocks gapped up higher on Tuesday, which is what we might expect after Monday's late positive reversal day. The rally stalled and faded in the final hour, so now we head into Wednesday with a negative reversal day. Seeing stocks lower on Wednesday morning would be what we might expect, but like Tuesday, that may not be how the day ends up. The Dow gained 133-points on the day after being up over 400 at the highs.
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The gains were solid, but declining volume was actually higher than advancing volume on the NYSE yesterday, so there was some internal weakness despite the strong gains. We saw a lot of the charts rally up to fill last week's open gaps, then decline back down after hitting resistance in some cases, so the next few days could be very telling, and of course in two days we'll get the anticipated dismal April jobs report.
Jobs reports are rear-view mirror data but Friday's report is going to be historic. They are expecting a loss of 21 million jobs in the month, and an unemployment rate over 16%. I don't know how accurate those estimates will be but does it matter if the jobs number is off by a million or the unemployment rate is off by 1% or more? Normally being off by 50,000 is a big surprise and a market mover, so this should be quite interesting to see the reaction. If it is 20 million jobs lost instead of 21 million, that's a huge beat, but it's still 20 million jobs lost. I don't know if the average investor is aware just how bad it is going to be. How will mom and pop react?
Oil had another big day gaining nearly 30% on Tuesday - perhaps signs of the economy being reopened sparked speculation in higher demand in the coming months. It ran up to the 50-day EMA and stopped and may get tested here, but what an impressive rally on Tuesday after breaking above one of the descending resistance lines.
Increase tensions between the U.S. and China may be the headline stealer and a catalyst out side of the economic data, but the battle going forward is going to be the dismal rear-view mirror earnings and economic data vs. the optimism from investors after this big rally off the lows, plus the economy gaining some footing again.
Thursday's weekly initial jobless claims number may be more meaningful than Friday's disaster jobs report since it is a better indication whether things are getting any better in the short-term, or not. Estimates are looking for about another 2.9 million new folks to be added to the list of those looking for work.
Are the FOMO (fear of missing out) buyers acting as sheep being led to the slaughter house, or is that farm fence gate open where the bulls can roam freely? That sounded better in my head than seeing it typed out.
The S&P 500 (C-fund) opened higher to fill in an open gap from May 1 (blue box), but opened a new gap (red box) above Monday's high in the process. There's a lot going on here and my takeaways are: The 200-day EMA has held as resistance so far. The 20 and 50-day EMAs have held as support. The rally is bout 6 weeks old and it just recently fell below the rising trading channel (red.)
If we go back to 2008 we see that we had a similar 7 week rally late that year and into 2009 before the bear flag looking trading channel broke to the downside and started a new leg lower. The next few index charts are all in the same situation.
The DWCPF / S-fund ran up to the old broken support line of the rising trading channel, filled the open gap from Friday, and backed off.
The Dow Transportation Index - same deal, although its open gap is within the rising channel and has not been filled yet, and it is trading below the 50-day EMA.
The EFA / I-fund is also below the 50-day EMA and below the rising trading channel.
The BND / F-fund chart was down again but it remains in the tight range between about 87.15 and 87.55. Depending on how you draw your support and resistance lines, that could be a big bull flag forming in blue.
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
Thanks for reading. Well 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 gains were solid, but declining volume was actually higher than advancing volume on the NYSE yesterday, so there was some internal weakness despite the strong gains. We saw a lot of the charts rally up to fill last week's open gaps, then decline back down after hitting resistance in some cases, so the next few days could be very telling, and of course in two days we'll get the anticipated dismal April jobs report.
Jobs reports are rear-view mirror data but Friday's report is going to be historic. They are expecting a loss of 21 million jobs in the month, and an unemployment rate over 16%. I don't know how accurate those estimates will be but does it matter if the jobs number is off by a million or the unemployment rate is off by 1% or more? Normally being off by 50,000 is a big surprise and a market mover, so this should be quite interesting to see the reaction. If it is 20 million jobs lost instead of 21 million, that's a huge beat, but it's still 20 million jobs lost. I don't know if the average investor is aware just how bad it is going to be. How will mom and pop react?
Oil had another big day gaining nearly 30% on Tuesday - perhaps signs of the economy being reopened sparked speculation in higher demand in the coming months. It ran up to the 50-day EMA and stopped and may get tested here, but what an impressive rally on Tuesday after breaking above one of the descending resistance lines.
Increase tensions between the U.S. and China may be the headline stealer and a catalyst out side of the economic data, but the battle going forward is going to be the dismal rear-view mirror earnings and economic data vs. the optimism from investors after this big rally off the lows, plus the economy gaining some footing again.
Thursday's weekly initial jobless claims number may be more meaningful than Friday's disaster jobs report since it is a better indication whether things are getting any better in the short-term, or not. Estimates are looking for about another 2.9 million new folks to be added to the list of those looking for work.
Are the FOMO (fear of missing out) buyers acting as sheep being led to the slaughter house, or is that farm fence gate open where the bulls can roam freely? That sounded better in my head than seeing it typed out.
The S&P 500 (C-fund) opened higher to fill in an open gap from May 1 (blue box), but opened a new gap (red box) above Monday's high in the process. There's a lot going on here and my takeaways are: The 200-day EMA has held as resistance so far. The 20 and 50-day EMAs have held as support. The rally is bout 6 weeks old and it just recently fell below the rising trading channel (red.)
If we go back to 2008 we see that we had a similar 7 week rally late that year and into 2009 before the bear flag looking trading channel broke to the downside and started a new leg lower. The next few index charts are all in the same situation.
The DWCPF / S-fund ran up to the old broken support line of the rising trading channel, filled the open gap from Friday, and backed off.
The Dow Transportation Index - same deal, although its open gap is within the rising channel and has not been filled yet, and it is trading below the 50-day EMA.
The EFA / I-fund is also below the 50-day EMA and below the rising trading channel.
The BND / F-fund chart was down again but it remains in the tight range between about 87.15 and 87.55. Depending on how you draw your support and resistance lines, that could be a big bull flag forming in blue.
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
Thanks for reading. Well 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.
