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Favorable news helps stocks last week. Now what?

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We got a strong jobs report early Friday morning and the initial reaction was tentative, but as the day went on, and a budget was finally passed in Washington, the bulls loosened up an we saw some solid gains, and the first positive Friday since early March. The I-fund led again as the dollar dropped on the jobs report, while bonds held up well, which is a bit of a surprise given the strong economic data.

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The jobs report came in better than expected with a gain of 211,000 jobs in April and a 10-year low in unemployment of 4.4%. It was certainly worthy of some buying but it may also give the Fed fuel to get be more aggressive with their tightening monetary policy.

Also over the weekend, Emmanuel Macron won the French run-off election in a landslide. This was the desired result by the market, but it was also a near foregone conclusion heading into the weekend, so the question is whether the market will continue to celebrate, or if we'll see a "sell the news" reaction with a little profit taking? The future gapped up higher on Sunday evening but the gaps are closing as I write this.

We'll take another look at commodities, which continue to falter, although oil reversed up quite a bit from an overnight panic sell-off on Thursday and into Friday.

Sorry that we didn't post a Weekend Wrap Up over the weekend. My son usually handles that but our family was attending his college graduation and celebrating accordingly. Congratulations to Thomas Crowley IV, a.k.a. "TommyIV" in the Forum.


The S&P 500 / C-fund broke above its bull flag on Friday and closed at a new high, but it is just slightly below the March 1st intraday high. Was the peak in late April the double top, or will the 2400 area mark an official double top? Can the S&P 500 start another leg up without first filling the open gaps below?




The weekly chart of the S&P 500 remains above that long-term trading channel although there is still a rare open gap on the weekly chart.




The DWCPF (S-fund) was down sharply on Thursday but the afternoon reversal off of the 50-day EMA gave it at some short-term momentum to rally again on Friday and close above the 20-day EMA. There is some descending resistance just above that will be tested today.




The Dow Transportation Index had a nice day, closing back above the 50-day EMA on Friday, but it looks like we have another small (blue) bear flag, which is inside that large (red) bear flag.




The EFA (EAFE Index / I-fund) just keeps on keeping on as the election in France plays out favorably for Europe and the euro, while the dollar hit a 6-month low.




The High Yield Corporate Bond Fund filled its open gap last Thursday and rebounded with stocks on Friday closing near the March 1st high. The rising wedge broke to the downside but we are still seeing higher highs and higher lows.




The price of oil tanked early on Friday but reversed hard to the upside which may produce a little follow-through, but technically there has been a lot of damage done to the chart. There is room to rally but that 200-day EMA, which is $3 above the current level, could be a roadblock.




I may be overreacting to this but I like to keep an eye on some of the other commodities because falling commodity prices can mean some weakness in the economy, and if the losses haven't been so sharp I may not be as interested. But they are.

Of course as oil falls, the price of gasoline falls, which is a good news / bad news situation since falling gas prices are like a tax decrease putting more money in consumer's pockets.



Gold has fallen and silver has been hit very hard, but Iron Ore has lost over 33% from 2017 highs...




Even rubber is down tremendously in the last couple of moths. Why and what does it mean to us and the economy? From a technical analysis standpoint, that $200 area may provide support.




The AGG (Bonds / F-fund) closed slightly higher on Friday after reversing from early selling. It is now bumping up again the 20-day EMA and the bottom of its bear flag that it broke below on Thursday. I would have thought that bonds would have been down more sharply on a day with a jobs report that strong, so the late strength in bonds and reversal on Friday was a bit curious.




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)

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DWCPF (S Fund) (delayed)

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EFA (I Fund) (delayed)

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BND (F Fund) (delayed)

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