A better than expected jobs report on Friday was not what the doctor ordered for the bulls and the bears put the pressure on and took back most of the gains from Thursday's rally. The 390,000 jobs added was well above estimates and the unemployment rate remains 3.6%. Bonds were down as the yield on the 10-year Treasury creeps back up near 3%. The dollar was up but remains well off of May's highs after recently breaking its uptrend.
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A stronger than expected jobs report is not the best news for an inflationary environment. Oil futures are trading over $120. Some economic warnings from Jamie Dimon and Elon Musk last week. After a 9% move of off the recent lows, the market found reasons to resume its move to the downside with 3 of 4 days closing negative during the holiday shortened week.
After the big move off the lows, some backing and filling wasn't the worse thing that could have happened, but 8 out of 9 down weeks reminds us that we are still in a bear market, and it may not be smooth sailing this summer without some quick improvements in the charts. Bear market rallies can be explosive and 9% probably qualifies, but being below some key resistance and major moving averages, the bears still have the ball and the bulls will have more to prove if they want out of this bear market.
Let's talk about what's on the minds of a lot of you lately, and that is the TSP website issues. Things are improving. People who were having trouble are reporting success creating their new accounts simply using a different browser, and some said they had success with the phone app versus the Desktop version, so trying different things could clear up some issues while they work on them.
It sounds like trying to talk with a TSP rep is taking a couple to several hours just to get connected, and that's just awful, but with millions of participants and so many changes and almost as many issues, a lot of those folks needed help and they probably don't have the workforce in place to handle swiftly. But this too shall pass.
It looks like I overreacted to the TSP website's old share price page on Friday because it is back online - or maybe they read our commentary.
Anyway, that is a relief to me in regards to moving those prices to our AutoTracker.
https://www.tsp.gov/fund-performance/share-price-history/
... and again, they are always posted on TSP Talk shortly after the TSP posts them on their website...
https://www.tsptalk.com/tsp_share_prices.php
The TSP seems to be very responsive to the issues we've been posting in our forum. James48843 says he sees a pattern of the TSP fixing the issues right after he posts about it in the forum, so it may be that they are reading it and acting on these problems. That's really smart of them because who better than us active participants to help them find the bugs? So that is great news.
One issue that I still see is the year-to-date return. Right now mine shows that return as if the year started on May 27 - the day after the shutdown began, rather than in January. The balance seems correct however.
So, there are issues, but the TSP seems to be moving quickly in the right direction to fix the bugs as they are reported.
What may not be moving in the right direction is the stock market after Friday's sell off. I see a good argument for both sides right now, bulls and bears, and this week will be important.
I mentioned this pattern several days ago and the S&P 500 is still seems going in the same direction as the late 2018 correction and recovery. Here's a comparison of the two with the current chart first.
This next chart is from the 2000 - 2002 bear market and I wanted to point out that, while the bear market lasted years, look how large some of the bear market rallies were, and how long some lasted. The current rally is just two weeks old and after Thursday it was about 9% above the lows. Is 9% all we are going to get, or can we see 20% like in 2001 and 2002? It may just be relative to size of the losses in the bear market and 2000 - 2002 was brutal.
The 2008 market was equally volatile so the point is, a good rally in a bear market is not an automatic "all's clear" sign for stocks, but they can be so big that you almost have to try to play it - especially if you are trying to beat the returns of the indices.
And at some point the lows will be made and a bottom is formed, but no one lets us know when - or which low - is the bottom. As a market timer, it doesn't matter as long as the large counter rally opportunities are there to take advantage of, and we can take profits to avoid some of the ensuing declines. Meanwhile, the buy and holder is in it for the long haul and may do well in the long-term, but they are at the mercy of the volatility in bear markets and these tumultuous times, rather than picking higher risk / reward setups.
Investors will be anxiously awaiting Friday's CPI Report (Consumer Price Index), the next major indication of inflation.
The S&P 500 (C-fund) moved sideways to lower last week reversing the big pre-holiday week rally. The 50-day EMA is just overhead and that is often where bear market rallies go to die. But the fact that the bears did not roll the the indices over but instead we saw a consolidation of the recent gains, makes for a possible bull flag. I marked the fake out we saw back in April and it would not surprise me to see something like that happen on the downside this week. Tough call here but so much of the bad news is already out there and the surprise move (after a fake out?) could be to the upside.
The DWCPF (S-fund) has that ugly bear flag on it and that concerns me the most at this point, so a move above 1800 would be a huge deal for the bulls. It might be tough but there is a smaller bull flag within the bear flag, so if it does break out to the upside, the flood gates may be opened for new buyers as it would negate the bear flag.
It looks like the market leading, economically sensitive Dow Transportation Index is at an important pivot point. 14,500, 14,750, and 15,000 are the current and upcoming challenges for this chart. There's so much resistance overhead so a serious test of the relief rally is here now.
The EFA (I-fund) it also bumping into some serious resistance as well and it closed back down below the 50-day EMA on Friday. I think the dollar may determine if that resistance will hold or not. If the dollar continues to pull back, we could see a breakout here. Otherwise there is a lot of room on the downside below resistance.
BND (bonds / F-fund) also hit resistance so all across the board the stock and bond charts show that the pre-holiday action was strong enough to push things to resistance, but the post holiday moved backed them off. Now comes the make or break week.
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. 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"]
[TD]
[/TD]
[TD="width: 338, align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
A stronger than expected jobs report is not the best news for an inflationary environment. Oil futures are trading over $120. Some economic warnings from Jamie Dimon and Elon Musk last week. After a 9% move of off the recent lows, the market found reasons to resume its move to the downside with 3 of 4 days closing negative during the holiday shortened week.
After the big move off the lows, some backing and filling wasn't the worse thing that could have happened, but 8 out of 9 down weeks reminds us that we are still in a bear market, and it may not be smooth sailing this summer without some quick improvements in the charts. Bear market rallies can be explosive and 9% probably qualifies, but being below some key resistance and major moving averages, the bears still have the ball and the bulls will have more to prove if they want out of this bear market.
Let's talk about what's on the minds of a lot of you lately, and that is the TSP website issues. Things are improving. People who were having trouble are reporting success creating their new accounts simply using a different browser, and some said they had success with the phone app versus the Desktop version, so trying different things could clear up some issues while they work on them.
It sounds like trying to talk with a TSP rep is taking a couple to several hours just to get connected, and that's just awful, but with millions of participants and so many changes and almost as many issues, a lot of those folks needed help and they probably don't have the workforce in place to handle swiftly. But this too shall pass.
It looks like I overreacted to the TSP website's old share price page on Friday because it is back online - or maybe they read our commentary.
Anyway, that is a relief to me in regards to moving those prices to our AutoTracker.https://www.tsp.gov/fund-performance/share-price-history/
... and again, they are always posted on TSP Talk shortly after the TSP posts them on their website...
https://www.tsptalk.com/tsp_share_prices.php
The TSP seems to be very responsive to the issues we've been posting in our forum. James48843 says he sees a pattern of the TSP fixing the issues right after he posts about it in the forum, so it may be that they are reading it and acting on these problems. That's really smart of them because who better than us active participants to help them find the bugs? So that is great news.
One issue that I still see is the year-to-date return. Right now mine shows that return as if the year started on May 27 - the day after the shutdown began, rather than in January. The balance seems correct however.
So, there are issues, but the TSP seems to be moving quickly in the right direction to fix the bugs as they are reported.
What may not be moving in the right direction is the stock market after Friday's sell off. I see a good argument for both sides right now, bulls and bears, and this week will be important.
I mentioned this pattern several days ago and the S&P 500 is still seems going in the same direction as the late 2018 correction and recovery. Here's a comparison of the two with the current chart first.
This next chart is from the 2000 - 2002 bear market and I wanted to point out that, while the bear market lasted years, look how large some of the bear market rallies were, and how long some lasted. The current rally is just two weeks old and after Thursday it was about 9% above the lows. Is 9% all we are going to get, or can we see 20% like in 2001 and 2002? It may just be relative to size of the losses in the bear market and 2000 - 2002 was brutal.
The 2008 market was equally volatile so the point is, a good rally in a bear market is not an automatic "all's clear" sign for stocks, but they can be so big that you almost have to try to play it - especially if you are trying to beat the returns of the indices.
And at some point the lows will be made and a bottom is formed, but no one lets us know when - or which low - is the bottom. As a market timer, it doesn't matter as long as the large counter rally opportunities are there to take advantage of, and we can take profits to avoid some of the ensuing declines. Meanwhile, the buy and holder is in it for the long haul and may do well in the long-term, but they are at the mercy of the volatility in bear markets and these tumultuous times, rather than picking higher risk / reward setups.
Investors will be anxiously awaiting Friday's CPI Report (Consumer Price Index), the next major indication of inflation.
The S&P 500 (C-fund) moved sideways to lower last week reversing the big pre-holiday week rally. The 50-day EMA is just overhead and that is often where bear market rallies go to die. But the fact that the bears did not roll the the indices over but instead we saw a consolidation of the recent gains, makes for a possible bull flag. I marked the fake out we saw back in April and it would not surprise me to see something like that happen on the downside this week. Tough call here but so much of the bad news is already out there and the surprise move (after a fake out?) could be to the upside.
The DWCPF (S-fund) has that ugly bear flag on it and that concerns me the most at this point, so a move above 1800 would be a huge deal for the bulls. It might be tough but there is a smaller bull flag within the bear flag, so if it does break out to the upside, the flood gates may be opened for new buyers as it would negate the bear flag.
It looks like the market leading, economically sensitive Dow Transportation Index is at an important pivot point. 14,500, 14,750, and 15,000 are the current and upcoming challenges for this chart. There's so much resistance overhead so a serious test of the relief rally is here now.
The EFA (I-fund) it also bumping into some serious resistance as well and it closed back down below the 50-day EMA on Friday. I think the dollar may determine if that resistance will hold or not. If the dollar continues to pull back, we could see a breakout here. Otherwise there is a lot of room on the downside below resistance.
BND (bonds / F-fund) also hit resistance so all across the board the stock and bond charts show that the pre-holiday action was strong enough to push things to resistance, but the post holiday moved backed them off. Now comes the make or break week.
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. 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.
