The market did a little churning after Wednesday's Fed driven strong gains, but they rallied late. The indices were mixed so investors are still looking for the best place to put money to work in this tapering, low interest rate environment. The largest companies of the Dow and the small caps were treading water closing fairly flat on the day, while the S&P 500 was up nicely, and the Nasdaq ramped higher with big tech enjoying the Fed's dovish outlook on rates. Bonds were up with yields slipping, and the dollar ramped up putting pressure on the I-fund.
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On the other hand, the dollar broke above its bull flag, as a bull flag should. This put pressure on the I-fund, but surprising the metals market was very strong yesterday, which is something we normally see during a sell off in the dollar.
Jim Cramer made a good point yesterday. The election the other day is indicating that the republicans could be in position to take control of the House of Representatives next year. With the democrats in the White House for 3 more years and the Senate fairly tight, this could make it tough for politicians to get much done in D.C. The stock market hates major changes and loves gridlock, so this may be another reason that stocks can continue higher. The market is usually thinking 10 steps ahead of us.
We'll see if the jobs report is big enough to keep this market rolling, or if it will be another disappointment as we've seen in recent months. However, with investors still celebrating the fact that the Fed is not inclined to raise rates anytime soon, perhaps a weak report would play into that and be fine for them.
The S&P 500 (C-fund) is in that long channel, and those are not small moves in that channel. There are some pullback target areas, but I won't even talk about them because I know I sound too bearish for a market that is moving up relentlessly. There are a few reasons to be concerned here, but aren't there always? If you are trying to time the market, taking profits here is not the worst idea, but the big money this year is being made by those fearless buy and holders... again!
The DWCPF (S-fund) created a spinning top candlestick by closing off the highs and off the lows. This too clearly needs a rest, but there no law that says it has to. I'd love an opportunity to buy a correction into that large open gap near 2240, and that could happen some day, but the small open gap above 2300 may be more realistic. And actually there would be a lot of support near 2325, so the gap hunting could come up empty.
The EFA (I-fund) was down as the strength in the dollar was just too much for it to overcome. The I-fund is trending higher but it continues to lag the U.S. indices because of the recent in the dollar over the last few months.
BND (Bonds / F-fund) had a big day with yields sliding after the Fed said no rate hikes yet. Technically, it is breaking out to the upside here and there is an open gap near 85.80 that may need to get filled. The breakout, however, comes out of a rising wedge, which actually tend to break down, so I'm going to watch for a couple of days to see if this is a fake out, instead of a breakout.
The Dow Transportation Index has been down sharply in the last couple of days, but it is almost unnoticeable as it digests that giant one day rally after those AVIS earnings. We should know soon enough if the top of the old channel is going to hold as support, or if it just quietly moves back into the channel.
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
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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.
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Stocks were ripe for some profit taking, and while we did see the broader indices flat and breadth quite negative on the NYSE, the indices held up well, and as I mentioned, the money was heading into tech stocks. The Nasdaq also saw a lot more stocks down than up, but once again the more heavily traded big tech stocks overshadowed that weakness. There were also 360 new highs on the Nasdaq yesterday, and that's impressive. Bottom line, more stocks were down yesterday than up, but the large cap indices did well.
With earnings season winding down with most of the market movers having reported already, and the FOMC meeting behind us, investors will look for the next catalyst, and today we'll get the October jobs report. It is normally a main focus for investors but with the Fed out of the way, the data may not get the reaction that we normally see, unless it is well off estimates. The estimates are looking for about 400,000 new jobs and an unemployment rate of 4.7%. We've had some weak numbers in recent months, but perhaps that means we're due for an upside surprise. The stock market can be a leading indicator so it is certainly is not showing any signs that it thinks it could be a weak report.
The yield on the 10-year Treasury looks like it wants to break down, and as we talked about, the Fed's action is the cause as they have no plans yet to raise interest rates. Perhaps the 1.4% area where we have an open gap, and where a head and shoulders breakdown target would be, is the target?
With earnings season winding down with most of the market movers having reported already, and the FOMC meeting behind us, investors will look for the next catalyst, and today we'll get the October jobs report. It is normally a main focus for investors but with the Fed out of the way, the data may not get the reaction that we normally see, unless it is well off estimates. The estimates are looking for about 400,000 new jobs and an unemployment rate of 4.7%. We've had some weak numbers in recent months, but perhaps that means we're due for an upside surprise. The stock market can be a leading indicator so it is certainly is not showing any signs that it thinks it could be a weak report.
The yield on the 10-year Treasury looks like it wants to break down, and as we talked about, the Fed's action is the cause as they have no plans yet to raise interest rates. Perhaps the 1.4% area where we have an open gap, and where a head and shoulders breakdown target would be, is the target?
On the other hand, the dollar broke above its bull flag, as a bull flag should. This put pressure on the I-fund, but surprising the metals market was very strong yesterday, which is something we normally see during a sell off in the dollar.
Jim Cramer made a good point yesterday. The election the other day is indicating that the republicans could be in position to take control of the House of Representatives next year. With the democrats in the White House for 3 more years and the Senate fairly tight, this could make it tough for politicians to get much done in D.C. The stock market hates major changes and loves gridlock, so this may be another reason that stocks can continue higher. The market is usually thinking 10 steps ahead of us.
We'll see if the jobs report is big enough to keep this market rolling, or if it will be another disappointment as we've seen in recent months. However, with investors still celebrating the fact that the Fed is not inclined to raise rates anytime soon, perhaps a weak report would play into that and be fine for them.
The S&P 500 (C-fund) is in that long channel, and those are not small moves in that channel. There are some pullback target areas, but I won't even talk about them because I know I sound too bearish for a market that is moving up relentlessly. There are a few reasons to be concerned here, but aren't there always? If you are trying to time the market, taking profits here is not the worst idea, but the big money this year is being made by those fearless buy and holders... again!
The DWCPF (S-fund) created a spinning top candlestick by closing off the highs and off the lows. This too clearly needs a rest, but there no law that says it has to. I'd love an opportunity to buy a correction into that large open gap near 2240, and that could happen some day, but the small open gap above 2300 may be more realistic. And actually there would be a lot of support near 2325, so the gap hunting could come up empty.
The EFA (I-fund) was down as the strength in the dollar was just too much for it to overcome. The I-fund is trending higher but it continues to lag the U.S. indices because of the recent in the dollar over the last few months.
BND (Bonds / F-fund) had a big day with yields sliding after the Fed said no rate hikes yet. Technically, it is breaking out to the upside here and there is an open gap near 85.80 that may need to get filled. The breakout, however, comes out of a rising wedge, which actually tend to break down, so I'm going to watch for a couple of days to see if this is a fake out, instead of a breakout.
The Dow Transportation Index has been down sharply in the last couple of days, but it is almost unnoticeable as it digests that giant one day rally after those AVIS earnings. We should know soon enough if the top of the old channel is going to hold as support, or if it just quietly moves back into the channel.
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.
