For the TSP, the C-fund lost 0.70% on Friday, the S-fund was down 0.57%, the I-fund fell 0.67%, and the F-fund (bonds) gained 0.59%.  For more on the weekly and monthly returns, please see our TSP Weekly Wrap-Up.

After Thursday's encouraging employment report, Friday's negative surprise in the June jobs report - 18,000 jobs were created vs. 90,000 estimated with an unemployment rate of 9.2% - shook things up a bit.  We were expecting some kind of "sell the news" reaction, but that was if the report was good.  This was a serious reaction, but still buyers stepped up by the end of the day.

As I write this Sunday night, the overnight futures are trading quite a bit lower as all the talk during the weekend TV talk shows this weekend was about the jobs report and the debt ceiling negotiations, where not much progress is being made.  The question is, will a lower open be another opportunity for those under-invested, or should we start to consider profit taking after the recent sharp rally?

The S&P 500 pulled back toward the flat top breakout, while the 20-day EMA moved above the 50-day EMA.  This crossover is a bullish sign, should it hold, but it also tends to happen at a time when the index is overbought, which it was late last week. 
                        
                        Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

There is a concern that last week's peak could just be the top a of big trading range between about 1250 and 1350.  I continue to bring up the fake-out breakout of 2007 that turned out to be the current market peak.  To keep me bullish, I would need to see any new breakout above 1350 - and eventually 1370 - hold.


                        Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

The Dow Transports, which had made 3 consecutive new all-time highs, pulled back toward the old highs.  So far it is a healthy pullback.  If that 1550 cannot be recaptured early this week, there is a lot of room below to digest the recent spike higher.
 
                         
                        Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

The Nasdaq pulled back right to the level we talked about on Friday.  It filled the open gap created on Thursday, and closed above the old late May high.  Having been up 8 days in a row, more consolidation is very possible.  Like the Transports, there is a lot of unsupported room below if the area near 2835 fails.

                        
                        Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

Here is the overbought / oversold indicator for the NYSE.  After being up near +1000 we have seen the indicator come down to a more modest +500, but that is still overbought.  Another day or two of consolidation should bring this back to neutral.


                        Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

The TSP Talk Sentiment Survey came in at 52% bulls, 36% bears, for a bulls to bears ratio of 1.35 to 1. That is a neutral reading so the system's allocation remains 100% S-Fund for this week. The system is up 11.09% for 2011 through Friday's close.

Many investors had missed the recent big rally so I would be surprised if any pullback is very steep.  because of this, buyers should step up and take advantage of the weakness.  The disappointing jobs report and the concern over the debt situation could be giving them that opportunity.  At some point that will stop working, but while in a bull market, expect bullish results.

Thanks for reading!   We'll see you back here tomorrow.