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TSP Talk: Jobs report was solid - Stimulus no deal, but Trump acts

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It was a mixed day on Wall Street Friday after a better than expected jobs report. The indices spent most of the day in negative territory but a late rally pushed the Dow and S&P 500 into positive territory, while the Nasdaq and the small caps traded places from Thursday's action when the Nasdaq rallied and small caps were down.

Daily TSP Funds Return

The Small Caps of the Russell 2000 were up an impressive 1.59% but the midcaps in the S-fund kept that fund down to a modest 0.35% gain. The I-fund lagged after the dollar had a rare positive day, despite a possible negative reversal day as the rally stalled at the old support line.

The jobs report came in a lot closer to the high end of the wide estimates that we talked about on Friday. There was a lot of head scratching as we saw a forecast of +250,000 and some as high as +2 million. It came in at +1.763 million. The futures had been down leading into the report and the market didn't exactly explode on the strong report, but it did manage to see another day of dip buying and the indices closed at the highs of the day with modest gain in the S&P 500 index, and as we said mixed results in others.
The unemployment rate came in at 10.2%.

It was an impressive day considering that congress was on the verge of leaving D.C. with no deal on the coronavirus stimulus package, but stocks remained fairly buoyant because the word was that President Trump would act if congress did not, and that's what he did over the weekend.

The futures were flat to slightly lower on Sunday evening possibly because perhaps the $400 a week unemployment figure was less than Wall Street wanted, but so far the reaction the futures tells us that there's not much concern.

I was on the road for much of Sunday and I came home to some technical issues that I am spending my evening working on, so I may have to make this a quickie today.

The S&P 500 (C-fund) managed to close with a slight gain after spending most of the day in negative territory. There are a couple of small open gaps in the wake of this rally that will certainly be targets for the bears should we get a pullback. But the momentum is on the upside right now and the bears don't appear too hungry yet.

The weekly chart also produced a rare open gap last week, and ironically the rally also filled that open gap from the early 2020 crash. The old highs are certainly a possibility at this point, but will we see a meaningful double top pullback if it gets there?

The DWCPF (S-fund) had a good day although the 0.33% gain was a little disappointing with the Russell 2000 small caps index being up 1.6% on Friday.

The EAFE (I-fund) had one of those days where the dollar was up putting the pressure on, and the late rally in U.S. stocks came too late to help the overseas fund.

The Dow Transportation Index has been rallying and has up for eight straight days as it also reaches for its open gap from February. This market leader and economically sensitive index is a good sign for the stock market.

BND (bond ETF / F-fund) was down and went from the top of its trading channel, to the bottom in one day. Eventually that will break, but is today the day?

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

Tom Crowley

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