TSP Talk Blog

It's Friday again, and Fridays have been the big day for stocks so far in 2019. As a matter of fact, the last positive day for stocks was last Friday. There were no signs of life yesterday in the market as the Dow lost another 200-points, although it did close well off the lows. Some of the major indices are now about 2% below last week's highs. That's not bad and may be all we needed to see before the upside continues, but we did see some breakdowns in some charts that may be concerning.

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For two months or more, the market has not be concerned about much at all. Perhaps because the downside may have been overblown in December and it was just getting back to level the bulls and bears more readily agree on. But those big gains means there are profits that can be taken, and the question is whether that's all this selling is, or if the recent high is a lower high in a larger bear market top which peaked back in October.




The European Central Banks kept interest rates below 0% so that tells us they are still very worried about growth there. Global growth is still an issue. It's not about inflation. It's no longer about trade (we've rallied on that), and the Fed has played their cards by basically holding on interest rate hikes, and the market has reacted. So what's left as a catalyst?

We get the February Jobs Report this morning (Friday) and estimates are looking for a gain of about 175,000 jobs, an unemployment rate of 3.8%, and wage growth of 0.3%. Remember when your parents would say, "You want something to cry about? I'll give you something to cry about." This jobs report could be a deal changer that turns this market back around, or it could give the market a reason for its recent crying. I'm not sure we're at the point where bad news (low jobs number) is good news in the economic data world because the Fed has already said they are being accommodative. So a good report may be good for stocks, and a bad report may be bad. That's not always the case.


Administrative Note: We are announcing a new section on TSP Talk that we are going to try out called Retirement Talk with Tony. It will be retirement related articles - eventually posted regularly once we get fully started - from Tony Kendzior: CLU, CHFC, Retirement Planner. We've made a mutual agreement where Tony will provide free retirement content for us on TSP Talk, and in exchange we will give him a link to his financial / retirement planning services website for anyone who may be interested in finding out more. It looked like valuable information to me, and since retirement is not my area of expertise, I thought it could be a good fit for us so let's see how it goes. I'd like to welcome Tony to our team, and I hope you like the new material!

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The S&P 500 (C-fund) is still pulling back from the October / November / March highs and potentially trying to fill in a right shoulder of that inverted head and shoulders pattern. It fell through the 20-day EMA, and also closed slightly below the 200-day SMA again for the first time since February 12. The PMO momentum indicator on the bottom is crossing below its 10-day average for the first times since the first week in January.




The DWCPF (S-fund) was holding up well in early trading yesterday and actually went slightly positive briefly before it pulled back again. There is some light support at yesterday's closing area, and then there's the 50 and 200-day EMAs below that.




The Dow Transportation Index was down for a 10th straight day on Thursday and continues to fall through some key levels with the 50-day EMA failing yesterday. There's some support near 10,000 but below that it's almost a vacuum.




The dollar spiked higher yesterday, breaking out to new recent highs after the ECB kept interest rates in the negative and gave concerns about European growth.




The EFA (I-fund) reacted as it tends to do when the dollar rallies and broke down from a couple of layers of support.




The High Yields Corporate Bond Fund drifted a little lower again but it is holding up fairly well considering what stocks have been doing. One support line has broken but there is more support near 84.50 and 84.00.




The AGG (F-fund) was up as yields fell on the rally in the dollar. The rising parallel channel is intact after the shorter-term breakdown (blue dashed) late last month.




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Thanks for reading. Have a great weekend!

Tom Crowley


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