Another troubling sell off yesterday and this one was triggered by employment data which stronger than expected and moved yields and the dollar higher which added to the pressure on the stock market. The Dow shed 340-points and the indices basically gave up Wednesday's gains, and then some as we head into this morning's important monthly non-farm payrolls jobs report, which could end the recent stalemate in the indices.
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Despite the recent newsworthy massive layoffs from several big companies, the market turned positive morning futures into a sharp sell off yesterday triggered by some stronger than expected labor market data yesterday in the initial jobless claims, JOLTS and ADP jobs report, which seems to contradict the information we are getting from these companies.
That's where the Fed is directing their attention so investors are bracing for continued interest rate hikes, hence the selling in stocks. Today we get the December non-farm payrolls jobs report and perhaps it will confirm the strength of the weekly data, but if we look outside of the labor market, inflation does seem to be showing signs of coming under control.
One chart that says a lot is this ISM Manufacturing pricing data which is now near some of the lower levels of the last 70 years.
Chart source: https://www.bespokepremium.com/
Next week we will get the December CPI, which has also shown signs of some slowing in pricing data more recently.
Chart source: https://www.briefing.com
The Fed has to be considering this but apparently they don't care much about the economy when battling inflation which can be disastrous if not eventually controlled. It's wage inflation that they seem most focused on now.
By the way before I forget, the January CPI report which will come out on February 10, is using a different calculation so it may look odd when compared to prior months. That's not the next report. We do get the December CPI report next week on January 12th. More on the new calculation
So this morning's December jobs report could make or break this market as we see a long consolidation in the S&P 500, and a big move is likely off of a formation like this on the chart. Eventually it has to leave this 3800 - 3850 range.
One thing we know is that stocks don't generally go straight down or straight up, unless they throw a pandemic at us. When you see big declines in stocks, like an open gap, there tends to be an eventual push back up into the area of the large breakdown candlestick. Some happen the next day, some take weeks, some months. I'm looking at the large black candlestick from mid-December as something that may draw some attention before we get any attempts from the bears to test the October lows.
I am as concerned as anybody when I see the charts and potential for a recession, higher interest rates, inflation, lower earnings estimates, you name it. But I also know that almost everyone feels this way and it's not very common when the herd mentality is correct, so I am trying to be open minded and flexible.
If you look at S&P 500 and bond models from valuation gurus like John Hussman of Hussman Funds, he see a 12 year period where stocks are basically going to be flat. Whether you're young, middle aged, older, or retired, your retirement planning has to almost go out the window if he's correct. The buy and holder has to find a way to make money, and for me that has always meant being nimble, buying good opportunities and taking profits when I can. It's not easy, but it beats watching a buy and hold account shrink or stay flat for more than a decade.
The estimates for this morning's non-farm payrolls jobs report is for a gain of 200,000 to 215,000 jobs and an unemployment rate of 3.7%, but also wage data will also be a big factor of the market's reaction because of inflation and the Fed.
2023 Guess the Dow Contest anyone? The deadline to enter is this Sunday evening. More
Admin note: I know a lot of annual subscriptions will be expiring some time this month so I wanted to give you a head's up that we will be having a week long 25% off sale on annual subscription for TSP Talk Plus and RevShark's TSP Timing starting on Monday. As I mentioned earlier in the week, Intrepid Timer's service will not be participating in the sale, and The Last Look Report is already priced as low as we can go to keep it going.
The DWCPF (S-fund) is still consolidating and too bad we don't have unlimited trades to buy in the 1560 - 1570 area and sell near 1600. The chart dipped back down below that orange trading channel after breaking above it on Wednesday. The open gap above 1640 is in play, and as I talked about in the S&P 500 chart in top of this commentary, this chart can also try to back and fill that large black candlestick between 1660 and 1700 from back in mid-December.
The EFA / I-fund was down sharply with the U.S. stocks, but still managed a slightly smaller loss so it continues to outperform. It still has a moderate gain for the new year where the C and S funds are back in the red.
BND (bonds / F-fund) was down sharply early when yields popped higher on the better than expected jobs data yesterday. It closed well off the lows after bouncing off the 50-day EMA. It seems like it wants to go higher, but today's' December jobs report may determine that. The trend remains up with higher lows since the lows in October. There should be some good opportunities for the F-fund this year, and it is already up close to 1% this week despite yesterday's decline.
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. 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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Despite the recent newsworthy massive layoffs from several big companies, the market turned positive morning futures into a sharp sell off yesterday triggered by some stronger than expected labor market data yesterday in the initial jobless claims, JOLTS and ADP jobs report, which seems to contradict the information we are getting from these companies.
That's where the Fed is directing their attention so investors are bracing for continued interest rate hikes, hence the selling in stocks. Today we get the December non-farm payrolls jobs report and perhaps it will confirm the strength of the weekly data, but if we look outside of the labor market, inflation does seem to be showing signs of coming under control.
One chart that says a lot is this ISM Manufacturing pricing data which is now near some of the lower levels of the last 70 years.
Chart source: https://www.bespokepremium.com/
Next week we will get the December CPI, which has also shown signs of some slowing in pricing data more recently.
Chart source: https://www.briefing.com
The Fed has to be considering this but apparently they don't care much about the economy when battling inflation which can be disastrous if not eventually controlled. It's wage inflation that they seem most focused on now.
By the way before I forget, the January CPI report which will come out on February 10, is using a different calculation so it may look odd when compared to prior months. That's not the next report. We do get the December CPI report next week on January 12th. More on the new calculation
So this morning's December jobs report could make or break this market as we see a long consolidation in the S&P 500, and a big move is likely off of a formation like this on the chart. Eventually it has to leave this 3800 - 3850 range.
One thing we know is that stocks don't generally go straight down or straight up, unless they throw a pandemic at us. When you see big declines in stocks, like an open gap, there tends to be an eventual push back up into the area of the large breakdown candlestick. Some happen the next day, some take weeks, some months. I'm looking at the large black candlestick from mid-December as something that may draw some attention before we get any attempts from the bears to test the October lows.
I am as concerned as anybody when I see the charts and potential for a recession, higher interest rates, inflation, lower earnings estimates, you name it. But I also know that almost everyone feels this way and it's not very common when the herd mentality is correct, so I am trying to be open minded and flexible.
If you look at S&P 500 and bond models from valuation gurus like John Hussman of Hussman Funds, he see a 12 year period where stocks are basically going to be flat. Whether you're young, middle aged, older, or retired, your retirement planning has to almost go out the window if he's correct. The buy and holder has to find a way to make money, and for me that has always meant being nimble, buying good opportunities and taking profits when I can. It's not easy, but it beats watching a buy and hold account shrink or stay flat for more than a decade.
The estimates for this morning's non-farm payrolls jobs report is for a gain of 200,000 to 215,000 jobs and an unemployment rate of 3.7%, but also wage data will also be a big factor of the market's reaction because of inflation and the Fed.
2023 Guess the Dow Contest anyone? The deadline to enter is this Sunday evening. More
Admin note: I know a lot of annual subscriptions will be expiring some time this month so I wanted to give you a head's up that we will be having a week long 25% off sale on annual subscription for TSP Talk Plus and RevShark's TSP Timing starting on Monday. As I mentioned earlier in the week, Intrepid Timer's service will not be participating in the sale, and The Last Look Report is already priced as low as we can go to keep it going.
The DWCPF (S-fund) is still consolidating and too bad we don't have unlimited trades to buy in the 1560 - 1570 area and sell near 1600. The chart dipped back down below that orange trading channel after breaking above it on Wednesday. The open gap above 1640 is in play, and as I talked about in the S&P 500 chart in top of this commentary, this chart can also try to back and fill that large black candlestick between 1660 and 1700 from back in mid-December.
The EFA / I-fund was down sharply with the U.S. stocks, but still managed a slightly smaller loss so it continues to outperform. It still has a moderate gain for the new year where the C and S funds are back in the red.
BND (bonds / F-fund) was down sharply early when yields popped higher on the better than expected jobs data yesterday. It closed well off the lows after bouncing off the 50-day EMA. It seems like it wants to go higher, but today's' December jobs report may determine that. The trend remains up with higher lows since the lows in October. There should be some good opportunities for the F-fund this year, and it is already up close to 1% this week despite yesterday's decline.
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. 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.
