TSP Talk Blog

Stocks were mixed but mostly flat on Friday with the Dow shedding 22-points. The reaction to the jobs report was muted as the number of jobs created came in near the estimated number, although the unemployment rate did come in lower than expected at 4.6%.

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Meanwhile the futures opened quite a bit lower on Sunday evening because of weekend talks about U.S. corporate taxes, and a referendum voted down in Italy over the weekend that could be another blow to the stability of the European Union.

Seasonality remains below average for another week or so, but will improve dramatically in the second half of the month. Seasonality is rarely used as a primary indicator but this year, especially since the election, it have been spot on.

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The SPY (S&P 500 / C-fund) was flat on Friday and is just above the first level of support for this pullback. That 218 area looks like a nice clean place for the pullback to end, but if that fails look for the 50-day EMA near 216+ to be next.




The weekly chart of the S&P 500 dipped below the summer highs. It probably means it needs to get back above 2200 otherwise it is more likely to pullback to test the rising support line again.




The DWCPF (small caps / S-fund) was also flat on Friday after a sharp 4-day pullback. That pullback erased all of the gains of Thanksgiving week.




The Dow Transportation Index actually closed at its highest point of this recent rally on Friday. I always thought that a higher price for oil negatively impacted the Transports but that hasn't been the case of late.




The price of oil is still hovering near the top of its trading range. Last week's announcement by OPEC to cut production may be the catalyst to push it above the trading range but from a technical analysis standpoint, we assume resistance will hold... until it doesn't.




The Nasdaq 100 was up slightly but didn't exactly get a big bounce off of that longer term rising support line. If the negative Nasdaq futures on Sunday night roll into Monday morning, we could be looking at a test of the 200-day EMA again.




The EFA (I-fund) remains below resistance and is getting closer to that big open gap near 55.50. The falling wedge pattern is actually a good sign since they "tend" to break to the upside, but the technical picture here is pretty bad right now so that's no guarantee. The dollar should get a pop higher today on the Italy news and that won't help the I-fund.




The AGG (bonds / F-fund) got a nice bounce on Friday, and being as oversold as they are, it's not a surprise and probably overdue. That doesn't mean bonds are in the clear because rallies will likely get sold, but a move to the 20-day EMA is not a long shot. That would wipe out about a month of losses. But don't forget that the Fed is going to rate rates on December 14 and who knows what kind of reaction the bond market will have to their policy statement? Will they want to raise again or are they data dependent, etc.?




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

Tom Crowley


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