The recent back and forth continued on Thursday as the bulls refuse to back down, and the indices consolidate nicely near the 2023 highs. This morning we will get the November jobs report and that could help break the recent range, but which way? Yesterday the Dow gained 63-points, lagging the broader indices percentage-wise which had very strong gains, but those gains basically retraced Wednesday's range. Bonds and the F-fund were up as yields hover over some support.
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Artificial Intelligence news from Google and AMD helped the tech heavy Nasdaq lead the way with a big gain of 1.4%, erasing recent losses and keeping the bears at bay as the indices refuse to relent, but this morning's jobs report may be the make or break news.
The November Jobs Report estimates are looking for a gain of about 175,000 jobs with an unemployment rate of 3.9%. On the Fridays of those two prior monthly jobs reports we saw gains of about 1% each time. Can that streak continue?
The October jobs report (reported in early November) came in softer than expected - about 20,000 jobs below estimates @150,000.
The September jobs report saw nearly 300,000 jobs created which was about twice expectations.
Augusts' jobs report saw 187,000 jobs created, beating estimates, and these don't sound like recessionary numbers, but the trend is slipping as you can see in this chart going back a couple of years.
This is a result of the COVID stimulus slowing wearing off after we had a huge spike in employment with those trillion dollar packages, which of course was due to the COVID recession that wiped out a tremendous amount of jobs.
Bottom line, the jobs market looks solid but perhaps the catalysts are wearing thin and the higher interest rate hikes will continue to negatively impact the economy, which will negatively impact the jobs market - which is what the Fed wants.
Wages are also a major factor and the Fed wants to see them ease as well to avoid another interest rate hike, so keep an eye on that number as well.
Here's the situation heading into the jobs report: We have an S&P 500 that has been trading in a sideways range since November 21. The bears have been unable to push things lower despite the severe overbought conditions since the October 27 low when the S&P was flirting with 4100, and here it is six weeks later near 4600.
Let's take a look back 30+ years to get a perspective about what has been happening since the financial crisis lows in 2009. The S&P 500 is still within an ascending channel coming off that low. I mentioned John Hussman of hussmanfunds.com a few times here, and I am doing so because his models say that we should expect the S&P 500 to lag the return of Treasury bonds by 7.5% over the next 12 years. He made a similar prediction in the late 1990's. This current bull market is now about 15 years old, with some volatility in there but the question is whether the late 2021 highs will be similar to the 2000 high in the chart below.
It looks like a great chart if you just buy and hold. But there were 13 year periods with no gain at all, and from the 2000 peak to the 2009 low, the losses were brutal. I don't know how old all of you are, but no return or a return that lags Treasuries for the next 12 years won't work for me. So, even though I've struggled with the market this year, I'm still focused on trying to time things, rather than just hold on, which works... until it doesn't.
The 10-year Treasury Yield was up slightly but it is holding at the 200-day EMA and the jobs report may tell us if this is going break below that support, or start to rebound off of it.
The dollar was down sharply yesterday and fell back below its 50-day EMA. That was odd considering it was about to test that huge overhead open gap.
Open gaps on the dollar chart don't tend to stay open. Looking at just 2023, almost every sizable open gap, and there were plenty, has been filled (blue.) I only see three that haven't been filled yet - two above and one below.
Over the next few weeks we will see some tax loss selling, but there may not be much of that this year given the gains in the indices. We will also see window dressing in the later half of the month as money managers spruce up their portfolios with 2023 winners for their end of year reports.
There is an FOMC meeting next week. No interest rates changes are expected, but of course anything Powell has to say can move the markets.
The S&P 500 (C-fund) is churning near the recent highs and around that old open gap from July. It looks toppy but the bulls refuse to give up. The open gaps below are so enticing for the bears, but they've made no moves yet. Will the jobs report do it for them and help fill in some of those gaps below, or will another goldilocks report send the S&P to new highs? The PMO momentum indicator is starting to roll over.
DWCPF (S-fund) had a 2-day pullback and it didn't even hit the rising support line before turning around yesterday. It's a solid looking, bullish chart that may need some backing and filling before it goes higher, but there's no rules that say it can't go higher first.
EFA (I-fund) was up on the day despite losses in the UK, France, Germany, Japan, and Hong Kong - the largest holdings in the I-fund. It was all about the dollar.
BND (Bonds / F-fund) inched up again as the bond bulls remain in control. It may take a surprise jobs report to change this, although the technical analysis is enough to anticipate a healthy pullback before moving higher.
Thanks so much for reading! Have a great weekend!
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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Artificial Intelligence news from Google and AMD helped the tech heavy Nasdaq lead the way with a big gain of 1.4%, erasing recent losses and keeping the bears at bay as the indices refuse to relent, but this morning's jobs report may be the make or break news.
The November Jobs Report estimates are looking for a gain of about 175,000 jobs with an unemployment rate of 3.9%. On the Fridays of those two prior monthly jobs reports we saw gains of about 1% each time. Can that streak continue?
The October jobs report (reported in early November) came in softer than expected - about 20,000 jobs below estimates @150,000.
The September jobs report saw nearly 300,000 jobs created which was about twice expectations.
Augusts' jobs report saw 187,000 jobs created, beating estimates, and these don't sound like recessionary numbers, but the trend is slipping as you can see in this chart going back a couple of years.
This is a result of the COVID stimulus slowing wearing off after we had a huge spike in employment with those trillion dollar packages, which of course was due to the COVID recession that wiped out a tremendous amount of jobs.
Bottom line, the jobs market looks solid but perhaps the catalysts are wearing thin and the higher interest rate hikes will continue to negatively impact the economy, which will negatively impact the jobs market - which is what the Fed wants.
Wages are also a major factor and the Fed wants to see them ease as well to avoid another interest rate hike, so keep an eye on that number as well.
Here's the situation heading into the jobs report: We have an S&P 500 that has been trading in a sideways range since November 21. The bears have been unable to push things lower despite the severe overbought conditions since the October 27 low when the S&P was flirting with 4100, and here it is six weeks later near 4600.
Let's take a look back 30+ years to get a perspective about what has been happening since the financial crisis lows in 2009. The S&P 500 is still within an ascending channel coming off that low. I mentioned John Hussman of hussmanfunds.com a few times here, and I am doing so because his models say that we should expect the S&P 500 to lag the return of Treasury bonds by 7.5% over the next 12 years. He made a similar prediction in the late 1990's. This current bull market is now about 15 years old, with some volatility in there but the question is whether the late 2021 highs will be similar to the 2000 high in the chart below.
It looks like a great chart if you just buy and hold. But there were 13 year periods with no gain at all, and from the 2000 peak to the 2009 low, the losses were brutal. I don't know how old all of you are, but no return or a return that lags Treasuries for the next 12 years won't work for me. So, even though I've struggled with the market this year, I'm still focused on trying to time things, rather than just hold on, which works... until it doesn't.
The 10-year Treasury Yield was up slightly but it is holding at the 200-day EMA and the jobs report may tell us if this is going break below that support, or start to rebound off of it.
The dollar was down sharply yesterday and fell back below its 50-day EMA. That was odd considering it was about to test that huge overhead open gap.
Open gaps on the dollar chart don't tend to stay open. Looking at just 2023, almost every sizable open gap, and there were plenty, has been filled (blue.) I only see three that haven't been filled yet - two above and one below.
Over the next few weeks we will see some tax loss selling, but there may not be much of that this year given the gains in the indices. We will also see window dressing in the later half of the month as money managers spruce up their portfolios with 2023 winners for their end of year reports.
There is an FOMC meeting next week. No interest rates changes are expected, but of course anything Powell has to say can move the markets.
The S&P 500 (C-fund) is churning near the recent highs and around that old open gap from July. It looks toppy but the bulls refuse to give up. The open gaps below are so enticing for the bears, but they've made no moves yet. Will the jobs report do it for them and help fill in some of those gaps below, or will another goldilocks report send the S&P to new highs? The PMO momentum indicator is starting to roll over.
DWCPF (S-fund) had a 2-day pullback and it didn't even hit the rising support line before turning around yesterday. It's a solid looking, bullish chart that may need some backing and filling before it goes higher, but there's no rules that say it can't go higher first.
EFA (I-fund) was up on the day despite losses in the UK, France, Germany, Japan, and Hong Kong - the largest holdings in the I-fund. It was all about the dollar.
BND (Bonds / F-fund) inched up again as the bond bulls remain in control. It may take a surprise jobs report to change this, although the technical analysis is enough to anticipate a healthy pullback before moving higher.
Thanks so much for reading! Have a great weekend!
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.
