The Dow managed a small gain on Thursday but the broader markets gave up their early gains and closed near their lows of the day posting moderate losses. The 10-year Treasury Yield moved back up to 4% yesterday and that put some pressure on stocks. At this point, after three days of selling - four if you include the losses on New Year's Eve - capital gains selling should be wrapping up and the bulls may make an attempt in the coming days to resume the rally, if the bears allow it. The "as goes January" idiom has a tendency to predict the year's outcome, so it would not be a good time for the bulls to get shy. Today's jobs report may determine who wins.
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Market breadth was about even yesterday with a similar number of stocks up on the day as down, although with the large cap tech stocks lagging, the declining share volume was about 26% higher than the advancing volume on the Nasdaq so the Magnificent Seven stocks were again a drag on the overall market.
We will get the December Jobs Report this morning and estimates are looking for a gain of approximately 162,000 new jobs and an unemployment rate of 3.8%.
Right now we could be back to a good news is good news set up for stocks as investors are less worried about another Fed rate hike, and perhaps more concerned about possible weakness in the economy, which has held up better than anticipated, so a solid jobs report could be met with a bullish reaction. That is assuming it isn't a blow out strong report where it could take rate cuts off the table for the foreseeable future, because the November and December rally in stocks had a lot to do with the market pricing in several rate cuts this year.
The bond market may be adjusting some from the dramatic drop in yields over the last two months from 5.0% to 3.79%, as the 10-year Treasury Yield tagged 4% again yesterday and closed at 3.99%.
This rebound, as well as the rebound in the dollar, has been a catalyst for the stocks market's decline, and the jobs report will certainly have its influence on those two.
The dollar is hitting some serious resistance in that 50-day EMA, but the angle of the incline during the recent 4-day rally may be suggesting that any pullback could be bought more quickly - similar to the way rebounds off of rapid declines were sold. But the reaction near the 50-day average may be the key.
The Fed Funds Rate was ramped up last year when inflation got out of control and if prior market action is any indication, falling rates is not usually the best set up for the stock market, and that is because the Fed is usually pulling the rug on rates when the economy starts to wobble.
Theoretically the stock market may be better off if interest rates stabilize up here in the 5% area but that would likely only happen if the economy holds firm and doesn't weaken, and that remains to be seen. Will the dog wag the tail, or the tail wag the dog?
OK, last time that I bug you about these...
The 2024 Guess the Dow Contest has started. The 2023 winner, Joblin20, received $100 Amazon e-Gift Card for guessing that the Dow would end 2023 the year at 37,55, and it closed at 37,650. If you want to get in on the 2024 contest, you can post your guess in the Forum by this coming Sunday evening. See this post for more information. [url]https://www.tsptalk.com/mb/site-news-and-announcements/41743-guess-dow-contest-2024-a.html
[/URL]
The 2023 AutoTracker Winners, who had some crazy good returns last year, have been posted in the forum.
You you can follow the leaders all year with a daily emailed report to see where these leaders and / or other TSP participants are moving their money, and when they are making the moves with the Last Look Report service. More on that: Last Look Report.
The S&P 500 (C-fund) tried to rally early, and was positive for most of the day on Thursday before a late sell off pushed it to the lows of the day and giving it a moderate loss. It closed below the 20-day EMA yesterday and if this pullback continues after the jobs report today, I drew in some potential lower target areas. The PMO indicator is now solidly below its moving average, which is a bearish sign, but as strong as the market was the prior two months, we could see some short-term oversold dip buying here. Whether it holds or lasts is another question. Yesterday's early rally didn't.
DWCPF (S-fund) was flat on the day so no changes technically to the chart.
EFA (I-fund) was up and the dollar, which was down early but closed off the lows, impacted the overseas market early yesterday, but that could change today after the late push higher in the dollar. The resistance in the UUP chart is clear and the fate of the EFA / I-fund may depend on whether that resistance gets taken out or not. If the resistance holds on UUP it is more likely that the I-fund stays more buoyant and holds above that 20-day EMA.
BND (bonds / F-fund) was down sharply with the 10-year yield popping back up to 4%. It was due for a pullback so it may be too early to make anything of this weakness yet. Some support broke but the bottom of that first open gap is still holding.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
Daily Market Commentary Archives
To get weekly or daily notifications when we post new commentary, sign up HERE.
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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Market breadth was about even yesterday with a similar number of stocks up on the day as down, although with the large cap tech stocks lagging, the declining share volume was about 26% higher than the advancing volume on the Nasdaq so the Magnificent Seven stocks were again a drag on the overall market.
We will get the December Jobs Report this morning and estimates are looking for a gain of approximately 162,000 new jobs and an unemployment rate of 3.8%.
Right now we could be back to a good news is good news set up for stocks as investors are less worried about another Fed rate hike, and perhaps more concerned about possible weakness in the economy, which has held up better than anticipated, so a solid jobs report could be met with a bullish reaction. That is assuming it isn't a blow out strong report where it could take rate cuts off the table for the foreseeable future, because the November and December rally in stocks had a lot to do with the market pricing in several rate cuts this year.
The bond market may be adjusting some from the dramatic drop in yields over the last two months from 5.0% to 3.79%, as the 10-year Treasury Yield tagged 4% again yesterday and closed at 3.99%.
This rebound, as well as the rebound in the dollar, has been a catalyst for the stocks market's decline, and the jobs report will certainly have its influence on those two.
The dollar is hitting some serious resistance in that 50-day EMA, but the angle of the incline during the recent 4-day rally may be suggesting that any pullback could be bought more quickly - similar to the way rebounds off of rapid declines were sold. But the reaction near the 50-day average may be the key.
The Fed Funds Rate was ramped up last year when inflation got out of control and if prior market action is any indication, falling rates is not usually the best set up for the stock market, and that is because the Fed is usually pulling the rug on rates when the economy starts to wobble.
Theoretically the stock market may be better off if interest rates stabilize up here in the 5% area but that would likely only happen if the economy holds firm and doesn't weaken, and that remains to be seen. Will the dog wag the tail, or the tail wag the dog?
OK, last time that I bug you about these...
The 2024 Guess the Dow Contest has started. The 2023 winner, Joblin20, received $100 Amazon e-Gift Card for guessing that the Dow would end 2023 the year at 37,55, and it closed at 37,650. If you want to get in on the 2024 contest, you can post your guess in the Forum by this coming Sunday evening. See this post for more information. [url]https://www.tsptalk.com/mb/site-news-and-announcements/41743-guess-dow-contest-2024-a.html
[/URL]
The 2023 AutoTracker Winners, who had some crazy good returns last year, have been posted in the forum.
You you can follow the leaders all year with a daily emailed report to see where these leaders and / or other TSP participants are moving their money, and when they are making the moves with the Last Look Report service. More on that: Last Look Report.
The S&P 500 (C-fund) tried to rally early, and was positive for most of the day on Thursday before a late sell off pushed it to the lows of the day and giving it a moderate loss. It closed below the 20-day EMA yesterday and if this pullback continues after the jobs report today, I drew in some potential lower target areas. The PMO indicator is now solidly below its moving average, which is a bearish sign, but as strong as the market was the prior two months, we could see some short-term oversold dip buying here. Whether it holds or lasts is another question. Yesterday's early rally didn't.
DWCPF (S-fund) was flat on the day so no changes technically to the chart.
EFA (I-fund) was up and the dollar, which was down early but closed off the lows, impacted the overseas market early yesterday, but that could change today after the late push higher in the dollar. The resistance in the UUP chart is clear and the fate of the EFA / I-fund may depend on whether that resistance gets taken out or not. If the resistance holds on UUP it is more likely that the I-fund stays more buoyant and holds above that 20-day EMA.
BND (bonds / F-fund) was down sharply with the 10-year yield popping back up to 4%. It was due for a pullback so it may be too early to make anything of this weakness yet. Some support broke but the bottom of that first open gap is still holding.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
Daily Market Commentary Archives
To get weekly or daily notifications when we post new commentary, sign up HERE.
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.
