TSP Talk Blog

Stocks rallied to start the new week, following through on Friday's jobs report triggered rally. Unlike on Friday, the Dow led the major three indices with a gain of 320-points, or 1.3%. The broader indices did very well but most ended with gains under 1%, except for the Transports and the Financials, which both gained over 2% on the day. The latter is a big deal since it the financials have been languishing of late.

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Having the Financials join the bullish parade could be just what the bull market needed as the Dow and S&P have been consolidating and trading in a range for several months now and they may have needed something to help push them to a new high. The financials are not out of the woods yet as it hit the 50-day EMA, but getting back above the 200-day EMA is a good start.




With earnings season starting soon, investors know that there are likely some big numbers that are going to be released. The lack luster performance of stocks over the last 3 or 4 weeks - prior to this recent rally - may have given them a chance to jump in at lower prices before those earnings are released. That may also set up a "sell the news" type of reaction so enjoy the rally, but when the good news starts to come out, assuming it does, we could see some profit taking.

Of course there's always the trade / tariff talk that could shake things up again, and did you notice that yesterday was a fairly light day news-wise out of Washington? Stocks seemed to appreciate that, but stocks have actually done well since the low made in April so is the trade war really hurting us, or is it that investors have just learned to ignore the noise? It may be bring volatility, but that also sets up better trading opportunities.

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The S&P 500 / C-fund had a big day, the third in a row, but it is now stretched up toward the top of the trading range going back to the March high. That long consolidation created a nice base, and a cup and handle formation, from which to break out if the geopolitical environment and earnings cooperate. The actual high on the S&P 500 was made back in January near 2875.




The small caps (S-fund) are much closer to a new all-time high after making a new high just last month, so they continue to lead the TSP funds.




The Dow Transportation Index had a big day gaining 2% and breaking above some key resistance. It's above the 50-day EMA after bouncing again off of the 200-day EMA for a third time in the last few months.




The EAFE Index (I-fund) has been lagging but yesterday it rallied nicely, making its way up to the 50-day EMA. There is an open gap just slight above the 50-day EMA, but it also opened another gap down near the 200-day EMA so we could see some chopping around while it fills some gaps.




The AGG (Bonds / F-fund) was down on the day as it backed away from that May peak. I'm not a big fan of the F-fund right now, not only because stocks are doing well, but we know the Fed is on a interest rate hiking mission and it feels like the F-fund is swimming upstream.




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

Tom Crowley


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