TSP Talk Blog

The market action yesterday may be looked at from a couple of vantage points, and depending on which angle you take, the action may have seemed bullish, or bearish. The Dow ended the day up 15-points, but it was up over 90 earlier in the afternoon so the bulls gave way and couldn't hold onto those gains. But the bears had many reasons to push things lower yesterday, and they didn't do a good job either.

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There's a lot going on politically, geopolitically, and economically, so with recent development in Syria, North Korea, and with bearish comments from the Fed on Wednesday and tax reform potentially far from certain, stocks had every excuse to sell off on Thursday, but they didn't. You can say that was a sign of strength for stocks, but then again the bulls were quick to relinquish early gains.

We get the March Jobs Report today (Friday) and estimates are looking for a gain of about 180,000 jobs and an unemployment rate of 4.7%. After the strong ADP report on Wednesday, expectations may be elevated so it could take a big number to bring buyers in, but then again buyers have been lingering around every corner for the last few weeks as the indices have drifted lower somewhat, but have surprisingly remained in striking distance of new highs.

Update: Since I first posted this we got word that the U.S. military launched more than 50 missiles aimed at Syria. That obviously could impact the market. The overnight stock index futures have pulled back moderately while bond futures rallied.

The SPY (S&P 500 / C-fund) gained 0.25% on Thursday, gaining back most of Wednesday's losses, but it did not get back the big intraday gains that were erased by the FOMC Meeting Minutes. That negative reversal day still looms as the SPY tested and failed at the descending resistance line. A case can be made for the formation being an inverted head and shoulders pattern, but it is tilting downward. There is also a possible bull flag (blue) that looked to have broken out on Wednesday but failed, and on Thursday it tested the top and bottom of that flag.




The DWCPF (S-fund) had a nice day on Thursday but it still wasn't enough to get back all of Wednesday negative reversal losses. It is back above the 50-day EMA and testing the 20-day EMA and retesting that descending resistance line it had broken late in March.




The Dow Transportation Index hit the 50-day EMA with a solid 0.42% gain, but like the others above, it is up against resistance and the top of the flag again.




The price of oil pushed above the 50-day EMA this week and that could be what the Transportation Index has been waiting for. Both bottomed on March 27 and we'll see if the Transports can follow the lead and push above that 50-day EMA now that oil has.




The EFA (I-fund) was flat on Thursday and once again closed right on the 20-day EMA.




The AGG (Bonds / F-fund) has remained buoyant and near recent high lately, some of that because of the help from the Fed. When they said stocks were overvalued, it may have sent some stock market investors to the bond market.




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Thanks for reading. Have a great weekend!

Tom Crowley


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