The bears started the week where they left off last week by selling the positive open on Monday, but the bulls did not give up the fight. After several hours of back and forth, the bulls won the day with a strong rally into the close. Oil rallied again and that helped push the Dow to a near 200-point gain.
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The I-fund lagged with the late rally in the U.S. indices, and the C-fund led the way with the oil related stocks being the catalyst. Bonds were up slightly.
The January Jobs Report comes out on Friday and estimates are looking for a gain of 225,000 jobs and an unemployment rate of 5.6%.
The SPY (S&P 500 / C-fund) has been holding up strongly at the January lows, but now the 20 & 50-day EMA, the Thursday and Friday highs, and the short-term descending resistance line - all coming together near 202.50, is a big obstacle in the road for the SPY. It would be a very bullish move to break above that level, but I have my doubts. The positive reversal day does bode well for some positive follow-through today, but that resistance may have other ideas.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) has been making higher lows recently and yesterday's positive reversal day pushed the index back above its 50-day EMA. The last positive reversal day in early January did produce a 2-day rally, but it stalled there. The short-term trend is currently down and we are testing that short-term resistance now.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-fund) backed off from resistance last week, but yesterday's gains may have created what looks like a pretty bullish looking bull flag. I'm still skeptical of any action in a bear market, but if this can break to the upside, it may be making a turn for the better.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Oil rallied another 4% on Monday and that was one of the main catalysts for stocks. It broke above the 20-day EMA and it now sitting just below $50 a barrel, which is a level we believe is key. Stocks started to stumble when oil was falling below $50-$55.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-fund) ended the day flat and remains in the rising trading channel. This looks bullish as long as the channel remains intact.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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