TSP Talk Blog

Stocks bobbed and weaved yesterday in front of today's (Friday's) jobs report. After last month's very disappointing report, investors seemed tentative to make any bold moves leading up to this one. We saw some selling of an early rally, and some buying of the afternoon decline. By the close the Dow lost 23-points although the indices were mixed with gains in the small caps.

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The June Jobs Report comes out this morning (Friday) before the open, and the estimates are looking for a gain of 170,000 jobs and an unemployment rate of 4.8%. The Jobs Report Contest winner will be announced in the forum. Click here for more info.

The jobs report is usually a market mover as it is an indicator of which way the Fed may be leaning on interest rates. The recent shake-up in Europe seems to have put to rest the idea of a hike in July or even September, but a big surprise in the jobs number could influence that. We may be back to a strong report being more of a bad news reading because of the possibility of a hike being put back on the table. Right now the attitude is leaning toward the economy weakening.

Despite that attitude, the S&P 500 came within 1.3% of a new all-time high yesterday. Strange environment, don't you think? Since the market seems to enjoy fooling the most people at any given time, the surprise might be a move to the upside to new highs. How many folks would be caught off guard? But the negatives are building up so it would certainly be a surprise.

The SPY (S&P 500 / C-Fund) flirted with a breakout above the descending resistance line, but it could not close above it. We'll keep looking over our shoulder at the big gap near 203, but as I said the other day, if you take the Brexit sell-off and quick recovery out of the chart equation, the longer-term rising support line would still be intact. In fact it looks like a possible cup and handle formation that would like to breakout to new highs. But can we ignore that sell-off? Many get retested and that is what that gap would like to see happen.




The DWCPF (S-fund) is nearing the apex of a convergence between rising support and descending resistance. It trades above all of the major moving averages, which is bullish, but the gap is always a possible downside target.




The Transportation Index looks pretty bad even though it has rallied significantly off the recent lows. It's in a downtrend and trades below all three major moving averages.




The EFA (I-fund) remains a mess and only the strength in the London FTSE seems to be holding it up. There's a big gap above and below the current levels.




The Chinese Shanghai Index is showing some life and has made a new multi-month high this week but it is coming up against some long-term resistance in the form of both a descending resistance line, and the 200-day EMA.




The AGG (Bonds / F-fund) was down slightly yesterday as there are several open gaps that may need attending below, plus the breakout above the channel could be an indication of an exhaustion rally that may need a rest soon.




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Thanks for reading. Have a great weekend!

Tom Crowley


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