TSP Talk Blog

The intraday swings continue to be quite wide, and if you don't like what you're seeing in the market in the morning, just wait until the afternoon or close to see if you like it better. The Dow was down almost 400-points at the lows on Thursday so it was a major positive reversal day since it closed in positive territory. The other major indices were all down on the day, but each saw impressive positive reversals.

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The April Jobs Report comes out this morning (Friday) and estimates are looking for a gain of 190,000 jobs and an unemployment rate of 4.0%. This could be a big market mover but there seems to be more room for error this time around since investors are so concerned about interest rates that they don't want to see too hot of a number. But a significant weak number could spook the growth story. So it's almost damned if it does, and damned if it doesn't. The wage growth number will be a big focus now that inflation concerns are back on the table.

The charts are in very vulnerable positions if support breaks down, but the support levels that the charts are testing now have been formidable all year. The bulls have shown up each time the 200-day was tested, particularly if we had a day like Thursday where we broke below the 200-day average, but reversed up to close above it.

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The S&P 500 / C-fund is in such a vulnerable position but that 200-day EMA provided yet another bounce from a near breakdown. It's held over and over this year, but too many tests may mean too much temptation to break down. But do the bears have what it takes to keep selling here? They've been burned at this level a few times. The chart says it all as the index battles for position between support and resistance with some support failing while others hold, but resistance has been tough at the 50-day EMA.




The small caps / S-fund is in a downtrend but that can be considered a falling wedge, which is more bullish than a parallel descending channel. There's decent support at 1325 but it is still below the key 50-day EMA.




The Dow Transportation Index also posted a big positive reversal at the 200-day EMA and the bottom of that trading range that it has been intact since early February. Can the bottom of the channel hold again and rally back to the middle or the top from here?




The EAFE / I-fund has been holding up well compared to U.S. stocks but the recent rally in the dollar has given it some trouble. As we speculated yesterday, Thursday's price was lower than the EAFE Index might indicate on this chart, and that was because of the late sell-off in U.S. stocks on Wednesday that was not in Wednesday's I-fund price. There is still a big gap below 69 that may need to get filled, but that is also a bull flag and they tend to break to the upside, so the bulls seem to have an edge here.




Another check on China's Shanghai and we are starting to hear about the trade talks that are about to begin again. That could make or break this chart, and of course the world is listening. It looks like something has to give here and unfortunately this is more of a bearish pattern than bullish, but I suppose support could hold again.




The yield on the 10-year Treasury was down sharply on Thursday as investors moved into bonds when stocks were selling off on Thursday morning. But the yield is testing some support (the old resistance) and that does look like a bull flag so, based on the chart, I'd say yields may move higher from here.




The AGG (Bonds / F-fund) was up but closed off the lows as investors sold bonds and bought stocks in the afternoon after doing the opposite in the morning. Bonds look weak and the yield above seems to indicate that bond prices may fall from here, but of a course the jobs report could cause some havoc in the technical analysis.




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Thanks for reading. Have a great weekend!

Tom Crowley


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