Stocks opened lower and stayed down for most of the day on Thursday, closing near the lows of the day. It seems silly, but Greece is again the culprit. How many times can their economic woes take down global markets? Yet each time the market has moved to new highs. The Dow lost 171-points on the day.
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Bonds rebounded but only enough to fill an overhead open gap, which you will see down below.
We get the May jobs report today and estimates are looking for a gain of 225,000 jobs and an unemployment rate of 5.4%. Any surprises will certainly bring with it some volatility. After the report is released we will announce the winner of the Jobs Report Contest here.
The SPY (S&P500 / C-fund) fell 0.85% on Thursday, falling just below the 50-day EMA, but it did hold just above some rising support. As we talked about on Wednesday, the market may be needing to shake things up before it can proceed with a breakout, as it has done over and over this year. The red circles represent the breaks of the 50-day EMA and none of those breaks lasted for more than 4 days.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
I also marked the spike in volume on Thursday, which has been a sign of excessive downside in all but one case in early March, marking the low in each of the other instances.
The Wilshire 4500 (S-fund) was hit along with the large caps but remains above the 50-day EMA and rising support line.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Transportation Index did fail (so far) at the neckline of the head and shoulders pattern. Textbook H&S action.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE index / I-fund) lost about 1% Thursday and fell below the 50-day EMA for the second time this week. I can see a possible head and shoulders pattern but I wont mark it because H&S patterns are supposed to be continuation patterns in a bull market, so I don't want to draw too much negative attention to it yet. For now, the overhead open gap seems like the logical next step for EFA, despite what looks like some potentially negative technical action.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The dollar was up slightly but is still in a downtrend. Other than the overhead gap, the more compelling direction for the dollar in the short-term is down.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (bonds / F-fund) bounced back up to fill an open gap on Thursday. Bonds are oversold and we could see an attempt to fill the other open gap (green), but we'll have to see if the 200-day EMA is going to act as resistance now.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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Thanks for reading! Have a great weekend!
Tom Crowley
Posted daily at www.tsptalk.com/comments.php
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