Stocks opened the new week sharply lower, but stabilized rather quickly as the S&P 500, down about 17-points near the open, traded in a tight 10 - 15 point range for most of the day afterward, closing down 25. The Dow was down for a third straight day, the Nasdaq, the I-fund, and the Transports lost about 1% each, and small caps lagged with the Russell falling 1.4% and the S-fund gave up 1.23%.
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Tonight we'll get the State of the Union Address from the President. I'm sure we will hear about how strong the anomalous jobs report was on Friday, but as we know, +517,000 jobs and a decade's low unemployment rate wasn't something that the Federal Reserve wanted to see.
The highlight for the market today is that Fed Chair Jerome Powell is scheduled to be interviewed by the Carlyle Group founder David Rubenstein at the Economic Club of Washington, D.C. Perhaps we'll see what he has to say about that jobs report, assuming he didn't actually already know the outcome of that report released on Friday, when he spoke a couple of days before that.
The bond market and the dollar are still reacting to the the surprisingly strong jobs report as the yield on the 10-year Treasury pushed back above 3.6%, as well as above the 50-day EMA and a descending resistance line.
The dollar also gapped up and closed above its 50-day EMA and remained above that longer-term resistance line.
I have mentioned before that the Fed tends to follow the yield of the 2-year Treasury, and toward the end of January it was looking as if that yields was ready to fall below 4% and perhaps finally getting the Fed to hold off on raising interest rates despite their target rate actually being over 5%. Well, since late January the 2-year Treasury has turned back up, with that jobs report being a major catalyst, so that certainly is a more hawkish look and perhaps the Fed will g ahead and continue to raise the Fed Funds Rate to over 5%. If this 2-year yield surpasses the high of early January, the stocks market could get more cranky than it has been already over the last few days.
The VIX was up 6% to 19.4 yesterday as fear levels are coming off of the recent lows. There is resistance at 20 right now on the short-term chart, while ...
... the longer-term weekly chart of the VIX may be telling us that the lows are in as it bounced off a 1.5 year long support line last week below 17.5.
The S&P 500 (C-fund) pulled back to a convenient level - the prior peaks. In a perfect world and bullish market, this is where buyers would typically step up. A break below 4100 would likely mean 4000 gets tested next. There is a ton of support between 3900 and 4100 so the bears have some work to do if they are trying to push this lower.
DWCPF (S-fund) is testing the bottom of its trading channel off the December lows. Here too, a break below the channel would likely test the 1720 area. If that level fails, the bears would likely get more aggressive, but as of now this isn't a bad set up and it looks like pullbacks can be bought.
The EFA (I-fund) actually broke down from its long-term support line off the October lows. The jobs report lifted the dollar to the point that it turned this leading fund into one that looks suspect as of now. It could recapture that support but technically, a test of the 50-day EMA near 68-69 wouldn't be the worst thing to happen here.
BND (bonds / F-fund) fell sharply again, and again it was that strong jobs report that changed the trajectory. There's key support near 73 that could make or break a lot of things in US markets.
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 so much 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.
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Tonight we'll get the State of the Union Address from the President. I'm sure we will hear about how strong the anomalous jobs report was on Friday, but as we know, +517,000 jobs and a decade's low unemployment rate wasn't something that the Federal Reserve wanted to see.
The highlight for the market today is that Fed Chair Jerome Powell is scheduled to be interviewed by the Carlyle Group founder David Rubenstein at the Economic Club of Washington, D.C. Perhaps we'll see what he has to say about that jobs report, assuming he didn't actually already know the outcome of that report released on Friday, when he spoke a couple of days before that.
The bond market and the dollar are still reacting to the the surprisingly strong jobs report as the yield on the 10-year Treasury pushed back above 3.6%, as well as above the 50-day EMA and a descending resistance line.
The dollar also gapped up and closed above its 50-day EMA and remained above that longer-term resistance line.
I have mentioned before that the Fed tends to follow the yield of the 2-year Treasury, and toward the end of January it was looking as if that yields was ready to fall below 4% and perhaps finally getting the Fed to hold off on raising interest rates despite their target rate actually being over 5%. Well, since late January the 2-year Treasury has turned back up, with that jobs report being a major catalyst, so that certainly is a more hawkish look and perhaps the Fed will g ahead and continue to raise the Fed Funds Rate to over 5%. If this 2-year yield surpasses the high of early January, the stocks market could get more cranky than it has been already over the last few days.
The VIX was up 6% to 19.4 yesterday as fear levels are coming off of the recent lows. There is resistance at 20 right now on the short-term chart, while ...
... the longer-term weekly chart of the VIX may be telling us that the lows are in as it bounced off a 1.5 year long support line last week below 17.5.
The S&P 500 (C-fund) pulled back to a convenient level - the prior peaks. In a perfect world and bullish market, this is where buyers would typically step up. A break below 4100 would likely mean 4000 gets tested next. There is a ton of support between 3900 and 4100 so the bears have some work to do if they are trying to push this lower.
DWCPF (S-fund) is testing the bottom of its trading channel off the December lows. Here too, a break below the channel would likely test the 1720 area. If that level fails, the bears would likely get more aggressive, but as of now this isn't a bad set up and it looks like pullbacks can be bought.
The EFA (I-fund) actually broke down from its long-term support line off the October lows. The jobs report lifted the dollar to the point that it turned this leading fund into one that looks suspect as of now. It could recapture that support but technically, a test of the 50-day EMA near 68-69 wouldn't be the worst thing to happen here.
BND (bonds / F-fund) fell sharply again, and again it was that strong jobs report that changed the trajectory. There's key support near 73 that could make or break a lot of things in US markets.
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 so much 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.
