Stocks jumped again after a not so impressive jobs report. The Dow gained 249-points and the major indices all gained just short of 1%, while small caps shined again and gained nearly 2%. Bonds were down, which I can only assume was a reaction to the need for more stimulus.
[TABLE="align: center"]
[TR]
[TD="align: center"] Daily TSP Funds Return
[TABLE="align: center"]
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[TD][/TD]
[TD="align: center"]
[/TD]
[/TR]
[/TABLE]
That is likely the whole story - weak data means Wall Street want more stimulus. Nonfarm payrolls increased by just 245,000 in November, well below estimates, but the unemployment rate did fall to 6.7% from 6.9% in October, which is pretty impressive under the current circumstances. By the way, there were 225,000 new positive COVID cases on Friday alone.
As for the weekly jobless claim, which may be a better way to judge the employment situation, it is still way above normal levels, but we can see how quickly it has been improving since the economy turned.
And continuing claims are on the same trajectory - historically high, but falling fast.
It's a little difficult for me to wrap my head around being aggressively invested in stocks now because of the COVID situation and new lockdowns being announced. But bad news is good news when it comes to what the Fed can do for the market, on top of stimulus from congress.
Here's the Fed's balance sheet and we thought it was getting too high before COVID, after the COVID crash in stocks, but even now it continues to be just silly. Easy money.
And low interest rates. What's not to like for the stock market? The bubble will pop one day, but who knows when?
If your enjoying the rally, I applaud you. I was scared out a while ago, but clearly the Fed and congress have the power to keep feeding the market. And as I will show in charts to our TSP Talk Plus subscribers, this is bringing us to some historically scary looking overvaluations for the market.
The S&P 500 (C-fund) continues to scream higher as it pushed above yet another resistance line of Friday after the jobs report. I would say that the market tends to over react on jobs report days, and in the coming days it would tend to "normalize", but this market has been anything but normal in 2020.
The weekly chart of the S&P 500 shows how extended stocks are, almost no matter how you slice it.
The DWCPF Index / S-fund continues to lead on the upside as cheap money is king for growing companies who often need to borrow money to continue to grow. There is some possible resistance along that dashed red line, but that line it is rising rapidly.
The economically sensitive Dow Transportation Index was up over 1% on Friday, and it looks like it wants to push to a new leg higher as it tests the previous highs.
The EFA was up sharply while the TSP only gave the I-fund a gain of 0.23%. That was either making up for an over pricing on Thursday, or it will be adjusted with Monday's price.
The dollar was up slightly on Friday but it had been in a free fall the last few weeks, and that's one reason why the I-fund is going up like it is. I don't know how long either trends can sustain these extremes.
BND (Bonds / F-fund) was down sharply, but it is again tested the 50-day EMA for support.
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
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"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[TD][/TD]
[TD="align: center"]
[/TR]
[/TABLE]
That is likely the whole story - weak data means Wall Street want more stimulus. Nonfarm payrolls increased by just 245,000 in November, well below estimates, but the unemployment rate did fall to 6.7% from 6.9% in October, which is pretty impressive under the current circumstances. By the way, there were 225,000 new positive COVID cases on Friday alone.
As for the weekly jobless claim, which may be a better way to judge the employment situation, it is still way above normal levels, but we can see how quickly it has been improving since the economy turned.
And continuing claims are on the same trajectory - historically high, but falling fast.
It's a little difficult for me to wrap my head around being aggressively invested in stocks now because of the COVID situation and new lockdowns being announced. But bad news is good news when it comes to what the Fed can do for the market, on top of stimulus from congress.
Here's the Fed's balance sheet and we thought it was getting too high before COVID, after the COVID crash in stocks, but even now it continues to be just silly. Easy money.
And low interest rates. What's not to like for the stock market? The bubble will pop one day, but who knows when?
If your enjoying the rally, I applaud you. I was scared out a while ago, but clearly the Fed and congress have the power to keep feeding the market. And as I will show in charts to our TSP Talk Plus subscribers, this is bringing us to some historically scary looking overvaluations for the market.
The S&P 500 (C-fund) continues to scream higher as it pushed above yet another resistance line of Friday after the jobs report. I would say that the market tends to over react on jobs report days, and in the coming days it would tend to "normalize", but this market has been anything but normal in 2020.
The weekly chart of the S&P 500 shows how extended stocks are, almost no matter how you slice it.
The DWCPF Index / S-fund continues to lead on the upside as cheap money is king for growing companies who often need to borrow money to continue to grow. There is some possible resistance along that dashed red line, but that line it is rising rapidly.
The economically sensitive Dow Transportation Index was up over 1% on Friday, and it looks like it wants to push to a new leg higher as it tests the previous highs.
The EFA was up sharply while the TSP only gave the I-fund a gain of 0.23%. That was either making up for an over pricing on Thursday, or it will be adjusted with Monday's price.
The dollar was up slightly on Friday but it had been in a free fall the last few weeks, and that's one reason why the I-fund is going up like it is. I don't know how long either trends can sustain these extremes.
BND (Bonds / F-fund) was down sharply, but it is again tested the 50-day EMA for support.
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
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.
