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Weak close on Friday, but weekly chart improved

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Stocks chopped around in a fairly tight range on Friday but a late decline pushed the indices to their lows of the day setting up a negative reversal day on some of the charts. Small caps actually closed with a gain but the Dow lost 65-points on the day and it turned to be the first negative Month for the Dow since October.
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The negative reversal day starts the week with a bearish tone, but as you'll see below, the weekly chart of the S&P 500 improved quite a bit.

This Friday we will get the March Jobs Report and estimates are looking for a gain of about 180,000 jobs and an unemployment rate of 4.7%.

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The SPY (S&P 500 / C-fund) slipped on Friday but the weak close sets a negative tone to start the week after a slightly negative week last week. But if we look closer at the action, it wasn't all that bad. Stocks gapped lower last Monday but quickly reversed, bouncing off the triple level of support from the two supports lines and the 50-day EMA. By the end of the week it closed above the 20-day EMA but now it has stalled at some descending resistance and that's how we start the new week.




The weekly chart of the S&P 500 shows the index closed above that key support line (old resistance) that it had broken below the week before. That could be a bull flag forming, which of course is generally bullish for stocks if it does what bull flags tend to do. That doesn't mean it can't move down to test the bottom of the flag first, even if it does eventually break out.




The DWCPF (S-fund) moved above the descending trading channel last week but the weak close on Friday could mean another test of that resistance line may be in store for the small caps in the very short-term. It is trading above the 20 and 50-day EMA's so there are three levels of support between 1185 and 1195.




The Dow Transportation Index had a big week last week but they have run into what may be bearish resistance levels in the 20 and 50-day EMA's. If the Transports are going to lead the market higher again, this resistance will be the key. A move back above the 50-day EMA would give the market as a whole a big psychological boost, but it may be a formidable line to cross.




The EFA (I-fund) has pulled back from a small double top as the 62.60 area has been a tough nut to crack, but there's no doubt that the International stocks have been leading since the dollar has been sliding.




The price of oil seems to be setting the tone for the Transports which, as we saw, is in a key position below the 50-day EMA, as is oil. To me, this is the key for the week, at least until Friday's jobs report.




The AGG (Bonds / F-fund) has been patiently moving sideways above the 200-day EMA but below the upper resistance line of the descending parallel channel. This could be a bull flag forming, but it will have to move above that resistance to breakout. There's seems to be more room on the downside for AGG right now.




Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php

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

Tom Crowley


Posted daily at www.tsptalk.com/comments.php


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S&P500 (C Fund) (delayed)

(Stockcharts.com Real-time)
DWCPF (S Fund) (delayed)

(Stockcharts.com Real-time)
EFA (I Fund) (delayed)

(Stockcharts.com Real-time)
BND (F Fund) (delayed)

(Stockcharts.com Real-time)

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