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Stocks rallied on Friday and the big news was the strong jobs report. The Dow gained 337-points or 1.22%, and we saw solid gains of near 1% in many of the major indices. Not surprising, the safety type trades of bonds and gold were down as risk was certainly on Friday.
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The China trade deal took a backseat for a day to the jobs report (+266,000) which was much better than expected 185,000, and if you read my commentary on Friday, it demolished the "whisper" number that was going around of 135,000. That left little room for what investors would do.
In the past a number like that would trigger some concerns about the Fed wanting to raise rates, but after having cut them 3 times in recent months, and being on hold for now, this big number couldn't have been a better scenario for the market.
There is actually a two-day FOMC meeting starting tomorrow, but according to the futures, the chances of a change in the Fed Funds Rate is close to 0%.
While the jobs report was great, keep in mind that stocks are already near all-time highs, and there is a tendency for big rallies off of surprise jobs report to pullback some in the coming days, so while the data and the action look great, profit taking will be on some traders and investor's minds this week.
I am out of town for a couple of days and my son, TommyIV from the forum, who has been doing our Weekly Wrap-Up for us for a few years, has graciously offered to take care of the chart section for me for a couple of days. I'll be back on my regular schedule on Wednesday.
The jobs report gave the bulls the ammo to steal back the market sentiment. However the win for the bulls came at the open and the trading range was tight for rest of the day. With the jobs report out of the way investors will be looking for the next motivation to buy. If nothing else, the FOMC meeting may keep market players from taking back profit right away. No rate changes are expected but clarity to how the Fed sees the economy should have an effect on investors.
The TSP stock indices all face open gaps and price records in the way of further upside. Not impossible obstacles especially if trade news uplifts buyers. But its more likely for prices to fluctuate this week to adjust for the disturbance in the trend last week.
The S&P 500 (C-fund) gapped up Friday but was kept at bay by the rising trend of the last couple months and pressure from the record highs set just 6 days prior. New highs could be set with the help of unignorable good news, but gaps should be filled in order for the recent consolidation of this index to keep technical conditions healthy.
The DWCPF (S-fund) is meshing two trends right now. The longer view that
started early October and the trend set from November's action. Friday was
contained within both. This index also has an open gap to retreat to but
there is less pressure of record highs keeping from rising in price than in
the S&P 500.
Longer term trends for the DWCPF create additional trepidation for the potential of further upside in the short-term. We see trend of this year have
affected price action and so far kept the index from testing the all time highs of last year. A certain pattern is clear here so its depends on whether you believe this leg of buying is the breakout spree.
The Dow Transportation Index closed the open gap lingering from earlier in the week. Right now it seems moving averages are dictating the highs and lows of the days.
The EFA / (I-fund) followed U.S. stocks up and again matched the persistent resistant highs of November. Repeat of November or will this index soon establish a novel trend of December? Two gaps are opened within in easy reach.
The dollar gapped up with the jobs report rather than breaking the bear flag. Traders last priced the dollar equal with its 50-day EMA reversing it off the highs of the day.
The AGG (F-fund / bonds) continued its trend despite filling the gap and landing on the 20-day EMA Thursday. The index broke below a rising trend but finished the day about equal in price with the trend line. The 50-day EMA sits between the current price and the gaps left open last month.
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Thanks for reading.
TommIV, filling in for Tom Crowley
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Chart provided courtesy of www.sentimentrader.com
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