TSP Talk Blog

02/06/12

A strong employment report on Friday sent the indices soaring yet again as the relentless rally continued. The Dow gained 157-points after we got word that 243,000 jobs were created in January, and the unemployment rate had dropped to 8.3%.


For the TSP, the C-fund gained 1.47% on Friday, the S-fund was up 1.94%, the I-fund picked up 1.29%, and the F-fund (bonds) dropped 0.37%.

For the weekly and monthly TSP returns, please see our recent TSP Weekly Wrap-Up.

Stocks are defying gravity as the sharp rally continues having just one real intraday test of the 20-day EMA since the week before Christmas. There is still some resistance overhead but lately it has had no trouble with resistance.


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

Small caps are literally, nearly off the charts as the gains off of the late November low are at +25%. It also broke above the already steep ascending trend. This "could" be what they call a blow-off top. We'll see.


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

The bank stocks really liked the employment report as strong economic data gives hope for future interest rate hikes.


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

The yield on the 10-year T-Note soared on Friday, again on the strong economic data, but here it is back again at the 50-day EMA and the descending trendline.


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

Should the yield breakout to the upside, bonds and the F-fund would have a more difficult time.

Our Sentiment Survey came in at 50% bull and 42% bears for a ratio of 1.19 to 1, that is very surprising considering the strength of this rally. Normally in a market like this, everyone and their brother are bullish and you'd expect a ratio near 2.0 to 1 or higher, and a little pullback. But when we have this much doubt in the rally, with many people expecting a pullback, the market tends to be uncooperative. Of course this survey was taken before the good employment report and the big rally.

The market is a forward looking indicator itself, so seeing strong economic data after the rally makes sense. The question now is, will we see some profit taking before the next round of data? With earnings season nearly over, we should have fewer catalysts and that leads us into the weaker part of February seasonality-wise.

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

Tom Crowley


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