Jobs report faces
resistance
Stocks were choppy on Thursday, and the indices ended the day flat to
modestly higher by the close. The Dow added just 6-points,
basically flat, but the S&P 500 and Nasdaq fared better.
For the TSP,
the C-fund was up 0.41%, the S-fund gained 0.97%, and the I fund made
0.26%, while the F-fund slipped 0.07%.
There is a ton of resistance overhead in the S&P 500 chart and
today's jobs report will likely either give it the fuel it needs to
break that resistance, or be the catalyst to push it back down below it.
The 200-day EMA (1101) has been broken, but many people use the 200-day
Simple Moving Average (1106) instead, so when we start seeing an index
flirt with the 200-day MA's, I like to look at both since they can be
self-fulfilling prophesies. The S&P hit the Simple MA yesterday,
and sellers stepped in and took the S&P back below it before settling
3-points under it.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
The
difference between them is minor, but worth noting. The EMA
(exponential moving average) in algorithm which puts more emphasis on
the recent action in a chart. The simple moving average (SMA, or
just MA) simply adds up the closing prices of the prior 200 days and
divides by 200. Either way, we want to see both taken out if you
are a bull.
I am encouraged about the prospects of a break above the 200-day
averages as the Nasdaq continues to trade above it, and as the leader we
would hope the S&P 500 will follow along.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
The Nasdaq was up a solid 1% yesterday, once again leading the way to
the upside, and actually starting a little short-term uptrend of higher
lows and higher highs. But it too faces some resistance today as
the intermediate-term downtrend is now being tested. The jobs
report will have its say today whether that breaks or not.
Estimates for today's jobs report are for 500,000 new jobs being added
in May, and an unemployment rate of 9.8% to 10.0%.
This week's TSP Talk
Sentiment Survey came in at 50% bulls, 42% bears, for a 1.19 to 1
bulls to bears ratio. This is well off of the extremely bearish
0.38 to 1 ratio we saw a couple of weeks ago, but it is still below the
1.25 to 1 ratio, which is overly bearish, and keeps the system on a buy
signal for next week. The system has a return of +14.8% in 2010.
The market rarely, if ever, gives us a clear road map of future action,
but I am still keeping an eye on the 2007 chart as a possible outcome
for the current market activity.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
We still seem to be in the circled area above, which in 2007 led to a
test of the prior highs, but it was very choppy along the way. Of course point "G" in the above chart
also turned out to be the bull market top before the nasty 2008 bear
market began, so we may have to be careful what we wish for here, and be
ready to take profits if we do see a move back toward the 1220 high from
back in April.
Thanks for reading. Have a great weekend!
Tom Crowley
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