TSP Talk Blog

07/08/13

It was another wild day for stocks on Friday after the jobs report. The European markets had rallied sharply while the U.S. markets were closed on Thursday, so there was a positive catalyst going into Friday's trading, and the jobs report shook things up quite a bit, although the final outcome was quite bullish.

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The Dow rallied immediately out of the gate on Friday with a triple digit gain in the Dow at the open. Sellers stepped up and actually took the Dow into negative territory less than an hour into trading, but the buyers were there in this light volume holiday trading, and pushed the Dow up to the day's highs at the close with the Dow gaining 147-points.

The SPY looks good after the rally, but resistance is abound at this point so it looks like another immediate test for stocks on Monday morning.


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

The longer-term chart shows the same story, but you can see just how strong that old long-term support line is (red) - holding since last November. That old support, which would now be considered resistance, is rising so the immediate resistance test will come from the short-term descending trend line (blue).


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

Volume was of course light during the holiday trading so if investors are back today (Monday) we may get a better idea how this resistance is going to fare.

The 1987 comparison is still somewhat in play since the S&P is still below the rising support line, but clearly at this point we have not seen any panic selling like the '87 breakdown.


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

The Hindenburg Omen signals did eventually give us nearly a 5% pullback, but no signs of a crash yet.

July's seasonality is a three chapter story. Early July's strong bias has not disappointed the bulls this year, but we're just a few days away from the normally weaker part of July. At the end of July there is a return to another strong positive stretch. Why the 9th trading day in July is positive over 70% of the time, I'm not sure.


Chart provided courtesy of www.sentimentrader.com

Bonds broke down after the strong jobs report as the 7-10 year bond ETF made a new short-term low after the bear flag breakdown.


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

Bond yields of course did the opposite of bond prices, so here you see breakout from a bull flag.


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

As the S&P 500 flirts with overhead resistance, the market is again being tested. A successful break above resistance, and holding for at least 3-days, would likely put me back in the bullish camp, but until then I am leaning toward staying defensive.

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

Tom Crowley


Administrative Note: Starting last week, we have started a new service for you. Don't worry, it's free for a while. Some of you may know our forum member Coolhand, who has been posting and writing blogs in the forum for us for nearly 9 years. He has started a weekly report in the premium service area, which is and available to everyone who has created a premium service login. You will have to login to view the reports.

At some point in the future, and we are targeting January 2014 as the start date, "Coolhand's Market Analysis" will become a full service, daily subscription based premium service. If you don't have a login to the premium area yet, here is how to create one: Create Account. If you need help, please read FAQ #1... How do I sign up? or watch this quick instructional video. If you have an account, just login - www.tsptalk.com/members.

Also: The Ebbchart Premium Service will retire at the end of July so we won't be taking any new subscribers, or renewing monthly subscriptions come July 1. All current subscribers will have access through July 31, but we won't be charging any more renewal payments.

I want to thank ebbnflow for his years of dedicated reports and service. It has been a pleasure working with him. He is moving onto another endeavor and I wish him the best of luck!


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