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Positive reversal heading into jobs report

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The bears tried to put some pressure on when the market opened on Thursday but pesky dip buyers were right there to put them back in their place again. The Dow gained a healthy 81-points and closed at a new record, but for the most part the late rally took the major indices to about break-even on the day.
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The day was full of catalysts yet the market barely moved by the close. The released Tax Plan was being dissected and the new Federal Reserve chairman was announced.

This morning (Friday) we get the October jobs report and estimates are looking for a lofty gain of 300,000 jobs and an unemployment rate of 4.3%. It's always a possible market mover but to be honest, I don't even know what Wall Street wants to hear at this point. Has the herd changed from prior years where a report too strong gives them rate hike scares, or are they just happy to see economic growth? Lately the reports that have come in close to estimates seemed to yield the best results for the market - no surprises.

After the bell Apple was up about 2.4% after releasing their earnings report. Nothing earth shattering but it is part of the Dow and that gets most of the headlines, and the Nasdaq futures ran up about 0.3%.


The SPY (S&P 500 / C-fund) put in a nice positive reversal day after an early sell-off was met with buyers of the news of the tax plan and the new Fed chairman. Technically nothing has changed except that the positive reversal does have a tendency to follow through to the positive side, but we'll get the jobs report before the market opens and that may have a say in the direction.




The DWCPF (small caps / S-fund) was up slightly as it alternates being weak and strong days. There's a resistance line running along the 1310 area but the consolidation over the last nearly 5-weeks with no significant pullback has been impressive. There are some bearish flags (bear and "F") that can be drawn on the chart and that would be my only concern here.




The Dow Transportation Index did pull back to successfully test the 50-day EMA as we mentioned the other day, and we may have gotten a fake-out to the downside. These falling wedges tend to break to the upside but we're still watching that rounded top (blue) for possible resistance.




The EAFE (I-fund) was up slightly and remains near its recent highs.




The High Yield Corporate Bond Fund pulled back a little more after that mini-bear flag break down. There's some cracks here but that 50-day EMA will be the test if it pulls back anymore.




The AGG (Bonds / F-fund) spiked up and briefly broke above the descending resistance but reversed down and closed back in the trading channel - the opposite of what stocks did. This is a bearish chart but if that resistance is broken we may need to reevaluate. The negative reversal is obviously bearish.




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Thanks for reading. Have a great weekend!

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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