Stocks were mixed on Monday as the Dow closed up a handful of points, the S&P 500 was down modestly, while the Nasdaq got clobbered. The large tech companies are facing some possible antitrust and business practice probes. Those FAANG type of stocks dragged down the Nasdaq, the S&P 500, and the Dow to some extent. What was spared were the small cap and the Transportation stocks, both of which were positive on the day.
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So we saw a little panic selling during the course of the trading day, and several attempts at a reversal were swatted down, but there was a bit of a surge into the close to take the indices well off their lows, possibly setting up the classic Turnaround Tuesday. Not that we're at a market low, but the indicators are very oversold and probably due for some temporary relief.
The May jobs report comes out on Friday morning, and estimates are looking for a gain of 185,000 jobs, an unemployment rate of 3.7%, and wage growth of +0.3%. John Hussman tweeted out the other day that he expects a bad miss saying, "...employment is a lagging measure. Average growth of non-farm payrolls over the past 10 months has been about 216K. Without any trade shock, the next few months of payroll data were already likely to come in nearly 200K below that avg. Now we may get losses."
We shall see, but if that is the case then we may have an interesting situation setting up. If you recall, stocks were tanking in late 2018 when the Fed was raising rates. Then, stocks bottomed and exploded higher when the Fed changed their tune and said no more rate hikes in 2019. With the trade war playing out as it has, and economic data showing weakness, and if on top of that we get a negative or even much worse than expected bad jobs report, the odds of a rate cut gets very high. The market will like that.
There is an FOMC meeting this month on the 18th and 19th. Here's the latest on expectations for a rate CUT this year...
That's a lot different than what we saw 6 months ago.
So while the stock market may get upset if we do see a bad jobs report this coming Friday, the thoughts of a rate hike will start to take over and that could set up a nice rally into the FOMC meeting. Of course it could be a "buy the rumor, sell the news" event, but however it plays out, it could provide us with good trading opportunities.
The S&P 500 (C-fund) made several attempts to turn the ship around on Monday but the bears kept the pressure on for most of the day, with some dip buyers making a dent minutes before the close. The bulls will be looking for a Turnaround Tuesday but with most of the indices putting in lower lows and lower highs yesterday compared to Friday, there was no change in the trend yet. The semi-positive reversal late on Monday could help on Tuesday to change that trend. There was a gap filled yesterday from back in March, but there is another one near 2720 from February that is still open.
If we do get a relief rally, what can we expect? I posted some reasonable targets with the first being that 2800 area that was strong support, and could now be strong resistance. Then there is the top of the open gap near 2850. And finally the top of the prior rally's peak near 2890. After that we'd be looking at new highs, which I don't really expect, but I guess if the Fed starts cutting rates, it's possible.
The DWCPF (S-fund) was actually up on the day as small caps were spared the carnage of the large tech stocks that were hit so hard. There are now two spinning top formations which is a good sign that something is about to change, but with strong resistance near 1350, any relief could be short-lived.
The Nasdaq 100 Index is the large cap tech stock index and it was the drag on stocks yesterday as it lost 2% on the day. It did fill an open gap from March, so maybe that was the target?
The Dow Transportation Index closed with a modest gain, out-performing most because it was not pulled down by those tech stocks.
What happens when the dollar falls 0.53%? The I-fund celebrates and it was the best performing TSP Fund yesterday.
The AGG (Bonds / F-fund) was up again and all I can say is it is getting very stretched here and I would be backing off if I was in this fund. At least for a while.
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
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.
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So we saw a little panic selling during the course of the trading day, and several attempts at a reversal were swatted down, but there was a bit of a surge into the close to take the indices well off their lows, possibly setting up the classic Turnaround Tuesday. Not that we're at a market low, but the indicators are very oversold and probably due for some temporary relief.
The May jobs report comes out on Friday morning, and estimates are looking for a gain of 185,000 jobs, an unemployment rate of 3.7%, and wage growth of +0.3%. John Hussman tweeted out the other day that he expects a bad miss saying, "...employment is a lagging measure. Average growth of non-farm payrolls over the past 10 months has been about 216K. Without any trade shock, the next few months of payroll data were already likely to come in nearly 200K below that avg. Now we may get losses."
We shall see, but if that is the case then we may have an interesting situation setting up. If you recall, stocks were tanking in late 2018 when the Fed was raising rates. Then, stocks bottomed and exploded higher when the Fed changed their tune and said no more rate hikes in 2019. With the trade war playing out as it has, and economic data showing weakness, and if on top of that we get a negative or even much worse than expected bad jobs report, the odds of a rate cut gets very high. The market will like that.
There is an FOMC meeting this month on the 18th and 19th. Here's the latest on expectations for a rate CUT this year...
That's a lot different than what we saw 6 months ago.
So while the stock market may get upset if we do see a bad jobs report this coming Friday, the thoughts of a rate hike will start to take over and that could set up a nice rally into the FOMC meeting. Of course it could be a "buy the rumor, sell the news" event, but however it plays out, it could provide us with good trading opportunities.
The S&P 500 (C-fund) made several attempts to turn the ship around on Monday but the bears kept the pressure on for most of the day, with some dip buyers making a dent minutes before the close. The bulls will be looking for a Turnaround Tuesday but with most of the indices putting in lower lows and lower highs yesterday compared to Friday, there was no change in the trend yet. The semi-positive reversal late on Monday could help on Tuesday to change that trend. There was a gap filled yesterday from back in March, but there is another one near 2720 from February that is still open.
If we do get a relief rally, what can we expect? I posted some reasonable targets with the first being that 2800 area that was strong support, and could now be strong resistance. Then there is the top of the open gap near 2850. And finally the top of the prior rally's peak near 2890. After that we'd be looking at new highs, which I don't really expect, but I guess if the Fed starts cutting rates, it's possible.
The DWCPF (S-fund) was actually up on the day as small caps were spared the carnage of the large tech stocks that were hit so hard. There are now two spinning top formations which is a good sign that something is about to change, but with strong resistance near 1350, any relief could be short-lived.
The Nasdaq 100 Index is the large cap tech stock index and it was the drag on stocks yesterday as it lost 2% on the day. It did fill an open gap from March, so maybe that was the target?
The Dow Transportation Index closed with a modest gain, out-performing most because it was not pulled down by those tech stocks.
What happens when the dollar falls 0.53%? The I-fund celebrates and it was the best performing TSP Fund yesterday.
The AGG (Bonds / F-fund) was up again and all I can say is it is getting very stretched here and I would be backing off if I was in this fund. At least for a while.
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
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.
