TSP Talk Blog

Stocks rallied strongly again on Friday despite a jobs report that came up well short of expectations. Whether it was a play on the Fed, hoping this may have a positive spin for next week's FOMC meeting, or if it is just a bull market that ignores negative news, I don't know, but the gains put the three major indices into record high territory. The Dow gained 62-points.

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The wife and I are wrapping up a long-weekend getaway so I am going to make this quick today, and depending when I get home tonight, Tuesday's report may be a brief one as well. The I-fund had a big day as the dollar continues to drip lower, making a new post-election low on Friday.

I'll throw a little water on the hot market and post this chart again from Friday where, if the market is going to make a old month / new month reversal, today would probably be the day for it to start. I thought perhaps the jobs report would do it on Friday, and while we got a weak report, it failed to deter the bulls. Now that the bulls have had a weekend to digest it, perhaps they will also digest the 600-point Dow points and 90 S&P 500 points since the May low and take some profits?




The 138,000 jobs created in May fell short of the +185,000 expected, but the unemployment rate fell to a 16-year low of 4.3%. They also revised the prior two month's numbers down modestly.

This week the James Comey congressional testimony will be in the spotlight, and then of course the FOMC meeting where the Fed is expected to raise interest rates is on the schedule for next week.

The S&P 500 (C-fund) popped above another layer of resistance on Friday despite the weaker than expected economic data. Looking at this chart we see a strong rising trading channel off the May lows. The last year or so the bulls have been able to make these kind of moves with the occasional shock pullback, that quickly gets bought again. Trying to pick a top can be difficult with positive momentum so strong, but when things do turn we usually look back at the chart and see that a pullback wasn't a surprise because stocks don't go straight up forever. But when that will happen is anyone's guess.




The DWCPF (S-fund) had a big two-day rally to finally push it up toward the old highs after lagging for weeks. Friday's close was a little weak and that potentially sets up a negative reversal here, as those kangaroo tails can act as at least a temporary sign of fatigue when they are on the top side.




The AGG (Bonds / F-fund) rallied Friday, as we might expect after a weaker than expected jobs report. It gapped up and continues its rally after the bull flag breakout. Technically, that 109.50 area looks primed for another test as it will fill the gap and retest the old rising resistance line.




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

Tom Crowley