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Tariffs signed, jobs report next

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It was another very strange day for stocks on Thursday. The swings weren't as wide as we had been seeing, but the Dow vacillated from 100+ point gains to 100-point losses and back again a couple of times, before closing up 94-points. This just goes to show that it is a difficult market to price right now with so much information to disseminate from the tariffs, to a top economic advisor resigning, and the tax cuts being implemented - just to name a few - and how all of this translates into future earnings.
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The market seemed to be waiting on president Trump's Tariff announcement as it traded back and forth all day, but in the end there were no surprises and we saw mostly green across the board, although the small caps of the Russell 2000 broke its recent outperforming trend and lagged with a small loss. The S-fund did remain flat since it was helped by the mid-cap stocks it contains.

We get the January Jobs Report this morning (Friday) and estimates are looking for a gain of 210,000 jobs and an unemployment rate of 4.0%. It could be a market mover with investors taking in all of the information to gauge where inflation, interest rates, earnings, and the economy in general is heading. What a favorable jobs report would be is debatable at this point since the market doesn't want too hot of a report triggering more potential interest rate hikes. We still have a couple of weeks before the next Fed meeting but it seems to be a foregone conclusion that they will raise rates at that meeting, barring any major negative for the economy in the interim, and I suppose this jobs report could do that if it comes in very weak.


The S&P 500 / C-fund was up nicely on Thursday but it remains in a couple of bearish looking flags. Bear flags tend to breakdown but a favorable jobs report could help it move up above that small bear flag. However, the top of the flag may be tougher resistance if it gets there. It is also testing that orange 50-day SMA again.




The small caps / S-fund peaked above the bear flag for a minute yesterday, but closed just below it. It looks primed for a pullback here below that bear flag resistance, but if the resistance gets taken out, the upside move could be explosive.




The Dow Transportation Index is also in a double bear flag so the upside would be more of a surprise, but after the November 2016 through January 2018 rally, I guess nothing should surprise us on the upside.




The EAFE Index / I-fund is also in a mini-bear flag within a larger bear flag, but the top of that larger flag could always be hit to develop the flag before it breaks down. This pattern on many of the charts is showing the indecisiveness or lack of conviction from investors lately.




The dollar rallied and is trying to make a higher low, but it is still below the two 50-day averages and that open gap looks primed for a filling.




The AGG (bonds / F-fund) remains in a bear flag and continues to struggle below the 20-day EMA.




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. Have a great weekend!

Tom Crowley


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

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S&P 500 (C Fund)
S&P 500 INDEX,RTH (^GSPC)
DWCPF (S Fund)
Dow Jones U.S. Completion Total Stock Market Index (^DWCPF)
EFA (I Fund)
iShares MSCI EAFE Index (EFA)
AGG (F Fund)
iShares Lehman Aggregate Bond (AGG)
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