TSP Talk Blog

Stocks opened higher on Monday but it struggled to find any kind of direction throughout the morning. It looked like the bulls had finally taken charge during afternoon trading, but the bears were easily able to pull it back down into the close. The day ended modestly higher with the Dow holding onto a 30-point gain.

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The I-fund lagged again as the dollar moved higher, and bonds failed at a key resistance level and fell sharply.

As the historical seasonality chart indicated, the first trading day in June had been positive 64% of the time over the last 30+ years and Monday fell into place. Today, trading day #2, has been positive 69% of the time.

We get the May jobs report on Friday and estimates are looking for a gain of 225,000 jobs and an unemployment rate of 5.4%. The Jobs Report Contest is open in the forum. Click here for more information.

The SPY (S&P500 / C-fund) posted a small gain on Monday after once again flirting with the support line that we have been calling the rim of a cup and handle formation. So far so good, but enough is enough. The bears are waiting for any sign of weakness to take this down. Perhaps we'll get a turnaround Tuesday?


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

The Wilshire 4500 (S-fund) is in a similar situation with recent gains being digested but holding above the 50-day EMA.


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

The Dow Transportation Index had a big day after testing the first head and shoulders downside target. It's not uncommon to see a rally back up to the neckline from here, but that is more often than not some tough resistance to penetrate.


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

The EFA (EAFE index / I-fund) was down after the dollar rallied back up on Monday. The gap below is now completed filled and the 50-day EMA is being tested. The rising support like been broken so there are some concerns here if this doesn't bounce back quickly. There is an overhead open gap that could get some attention.


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

The dollar / UUP bounced back on Monday before filling any of the large open gaps below. Is it that strong now after falling for a month?


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

The AGG (bonds / F-fund) hit the 50-day EMA last Friday and has backed off sharply since. This has top written all over the bond market but it all depends on that 200-day EMA. The bull market in bonds won't die until the 200-day EMA gets taken out, plus a couple other things must line up, but that's the first order of business.


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

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

Tom Crowley


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