Nerves and oil prices hold back stocks again
by
, 09-01-2016 at 01:11 AM (1390 Views)
The action on Wednesday was very similar to what we saw on Tuesday; Stocks opened lower, made an intraday low in the afternoon, rallied into the close but still ended the day with modest losses. The Dow ended the day down 53-points, and the slide in oil may have been a big reason. One thing different yesterday was that the small caps and the Transports were also down.
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By now you probably know that the global markets are basically on hold waiting for Friday's jobs report so it can speculate further on the Federal Reserve's decision on whether to raise interest rates in September. The strength or weakness of the economy only seems to matter in how will impact rates, although it may actually be a relief to the market if rates finally start to go up, but that doesn't mean the initial reaction to a strong jobs report will be positive. The traders will likely make some noise first.
The August Jobs Report comes out on Friday morning and the consensus estimates are looking for a gain of about 175,000 to 190,000 jobs and an unemployment rate of 4.8%. The August Jobs Report Contest is now open in the forum. Click here for more info.
Per www.tsp.gov: "Some financial markets will be closed on Monday, September 5th in observance of the Labor Day holiday. The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (September 5th) will be processed Tuesday night (September 6th), at Tuesday's closing share prices."
The SPY (S&P 500 / C-Fund) dipped down to the bottom of the trading channel and again it held, although this time it couldn't quite close above the 20-day EMA. It's still the calm before the storm but yesterday's early selling wasn't all that tranquil as nerves are showing. The dip buyers were there again, however.
The DWCPF (S-Fund) also tested and held at the bottom of its channel and the 20-day EMA.
The Dow Transportation Index was down 0.40% but it held at the 50-day EMA and the descending neckline, which is supposed to act as support when tested after breaking above it earlier.
The Nasdaq 100 Index, which contains the large cap tech stocks, closed just above the 20-day EMA but yesterday's selling filled a small gap left open in early August. It's always nice to see a gap get filled, hold, and provide support.
The price of oil fell significantly yesterday easily falling through the 50-day EMA but came to rest at the important 200-day EMA. The 200-day EMA held in July on the first test but later gave way on its way to $39. It needs to hold here or $39 could be tested again and stocks probably won't like that.
The Japanese Nikkei Index and the Chinese Shanghai Composite have both been performing well, something that makes this August much different that last year's August. The Nikkei is looking to break back above the 200-day EMA for the first time in a while, and the Shanghai Composite moved above the 200-day EMA yesterday, breaking a minor downtrend and holding at the larger uptrend support. These look good - if it matters.
The AGG (Bonds / F-fund) has been treading water for weeks now and has remained within the channel and just above the 20-day EMA. It seems to be waiting on the jobs report and / or the FOMC rate decision.
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Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
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