More volatility in the stock market on Friday as a mixed jobs report sent stocks higher, then lower, then higher again into the close. A big decline in the dollar helped move prices higher... in almost everything, and of course the I-fund loved that. The Dow gained 402-points and oil jumped $4 a barrel to move back over $90. Next up, the election and the CPI report.
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The October jobs report beat estimates on the top end with 261,000 jobs added, but the unemployment rate came in 2 tenths higher than expected at 3.7%. That was favorable as far as the Fed is concerned as they have designs on weakening the jobs market to curb inflation.
The 10-year Treasury Yield was up slightly on Friday but it was the big move down in the dollar after the jobs report that impacted stocks and commodities dramatically. The dollar ETF chart is still in a big bull flag and holding above the 50-day EMA, but the near 2% decline pushed commodity and stocks prices higher, particularly the dollar sensitive I-fund which was up almost 4% on the day.
Here's a list of some key commodities that were positively impacted by that decline in the dollar on Friday. We saw gains of about 7% in copper, natural gas, and silver, while gold gained about 3%. So any relief the move up in the unemployment rate gave the Fed, this increase in prices can't be something the inflation hawks were happy about.
Not surprisingly, the price of oil was also up big on Friday. We talked about the bullish cup and handle formation on this chart on Friday and it didn't take long for it to break out. It broke above two resistance lines and the 200-day EMA, so mid to high 90's may be in the cards again for oil, although I do see it down about $2 during the Sunday futures trading.
Did a 0.2% increase in the unemployment rate shift investors into believing the Fed's interest rate hikes are finally working, and that inflation will soon peak and rollover? Well, one of the catalysts for the market this week will be the very important CPI inflationary prices report on Thursday. That may tell us more.
Also, the mid-term election results, which we should know about by Wednesday for the stock market's sake, will also be a major catalyst. However, we are seeing a few very tight races so we may not know right away who has control of the House and particularly the Senate. That could cause some uncertainty problems for the stock market.
The S&P 500 (C-fund) saw a nice rally as the daily swings remain quite wide. A gap was filled on Friday but it's interesting how many open gaps were filled in that area between about 3700 and 3750 in the last two months. The 3700 area has some decent support and so far it has held during this recent pullback. It's still below the 50-day EMA and in a bear flag so it's tough to get bullish at this point, but we have a couple of catalysts this week that may help the S&P break one side or the other between the support and resistance from the 50-day moving average and the flag.
The DWCPF (small caps / S-fund) has similar action going on but the glaring pattern that I see is that bear flag and a third consecutive close below the 50-day EMA.
The EFA (I-fund) had itself a day on Friday. We know that the dollar has a lot of impact of the EFA, so a 2% decline in the dollar on day when stocks were strong led to a whopper of a day for the the I-fund. +4%.
BND (bonds / F-fund) was up slightly with yields being mixed as the bond market tried to decipher what a strong jobs report with a higher unemployment rate meant.
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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The October jobs report beat estimates on the top end with 261,000 jobs added, but the unemployment rate came in 2 tenths higher than expected at 3.7%. That was favorable as far as the Fed is concerned as they have designs on weakening the jobs market to curb inflation.
The 10-year Treasury Yield was up slightly on Friday but it was the big move down in the dollar after the jobs report that impacted stocks and commodities dramatically. The dollar ETF chart is still in a big bull flag and holding above the 50-day EMA, but the near 2% decline pushed commodity and stocks prices higher, particularly the dollar sensitive I-fund which was up almost 4% on the day.
Here's a list of some key commodities that were positively impacted by that decline in the dollar on Friday. We saw gains of about 7% in copper, natural gas, and silver, while gold gained about 3%. So any relief the move up in the unemployment rate gave the Fed, this increase in prices can't be something the inflation hawks were happy about.
Not surprisingly, the price of oil was also up big on Friday. We talked about the bullish cup and handle formation on this chart on Friday and it didn't take long for it to break out. It broke above two resistance lines and the 200-day EMA, so mid to high 90's may be in the cards again for oil, although I do see it down about $2 during the Sunday futures trading.
Did a 0.2% increase in the unemployment rate shift investors into believing the Fed's interest rate hikes are finally working, and that inflation will soon peak and rollover? Well, one of the catalysts for the market this week will be the very important CPI inflationary prices report on Thursday. That may tell us more.
Also, the mid-term election results, which we should know about by Wednesday for the stock market's sake, will also be a major catalyst. However, we are seeing a few very tight races so we may not know right away who has control of the House and particularly the Senate. That could cause some uncertainty problems for the stock market.
The S&P 500 (C-fund) saw a nice rally as the daily swings remain quite wide. A gap was filled on Friday but it's interesting how many open gaps were filled in that area between about 3700 and 3750 in the last two months. The 3700 area has some decent support and so far it has held during this recent pullback. It's still below the 50-day EMA and in a bear flag so it's tough to get bullish at this point, but we have a couple of catalysts this week that may help the S&P break one side or the other between the support and resistance from the 50-day moving average and the flag.
The DWCPF (small caps / S-fund) has similar action going on but the glaring pattern that I see is that bear flag and a third consecutive close below the 50-day EMA.
The EFA (I-fund) had itself a day on Friday. We know that the dollar has a lot of impact of the EFA, so a 2% decline in the dollar on day when stocks were strong led to a whopper of a day for the the I-fund. +4%.
BND (bonds / F-fund) was up slightly with yields being mixed as the bond market tried to decipher what a strong jobs report with a higher unemployment rate meant.
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.
