9/04/12
Stocks rallied on Friday, gaining back much of Thursday's losses and closing out a rather dull month. We saw some nice gains early in August, but things have been moving mostly sideways since. The Dow gained 90-points on Friday.
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[TD="align: right"] G-Fund:
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[TD="align: right"] 0.0036%
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[TD="align: right"] 0.25%
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[TD="align: right"] 0.51%
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[TD="align: right"] S-fund:
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[TD="align: right"] 0.50%
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[TD="align: right"] I-fund:
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[TD="align: right"] 0.57%
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The holiday is behind us and we should start seeing volume pick up, although the first couple days after Labor Day can be slow as well. Coming back from vacations, many investors will probably be a little tentative in front Friday's jobs report and next week's Fed meeting.
The S&P 500 did its usual pullback from a double top, but it has been long enough and the double top will be less of a factor going forward and the market will be looking for more of a catalyst, and the jobs report and Fed meeting will certainly be that.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Taking a look at some leading indexes shows the Dow Transportation Index looking over a precipice. It needs to bounce off of support here, or we could have a breakdown and we know that the S&P has a tendency to follow the direction of this leader.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq Composite and the Nasdaq 100 are the secondary leaders, but the Semiconductors are an important piece of those technical indices and the semiconductors have a nice looking chart.
There is a large bull flag that looks to be testing the support of the important 50 and 200-day EMA's, with added support from the June and July highs.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
This could be an important tell for the market. A break above the flag could be very bullish for the stock market in general.
The dollar is also showing signs of wanting to help the stock market as it fell back below the 200-day EMA again on Friday and made a new multi-month low.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
As we know, a weak dollar has the effect of propping up prices - in whatever trades in dollars.
I thought that it was interesting that the yield on the 10-year Treasury note dropped sharply while stocks rallied on Friday.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bond prices move counter to yields so we saw bond and the F-fund have a nice day while stocks rallied. That's a little unusual and I'm sure there was a reason for it, but it was a pre-holiday Friday and we can expect some out of the ordinary action. Strange action prior to a holiday tends to correct itself after the holiday.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.html
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