TSP Talk Weekly Wrap Up

Volatility picked up last week as we saw two days with 200+ point moves in the Dow, three total triple digits moves, and none less than 75-points. Volatility is generally a bearish sign but there was some very positive activity to end the week and we’ll have to see how investors react post-jobs report.

Thursday the indices put in a positive reversal day and we had a big bullish follow through day on Friday after the May jobs report on Friday, which actually saw an increase in the unemployment rate.

Here are the up to date TSP fund returns through June 7:

The S&P 500 did a great job of holding the longer-term rising support line and the 50-day EMA last week, but it is now testing some of the recent short-term resistance since the May 22nd high. We should know pretty quickly on Monday if the recent pullback is over, or if the new resistance will hold and things head south again.

Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

The big 207-point rally on Friday was triggered by a very important jobs report that hit a sweet spot. It was a small target but we saw a decent increase in jobs in May, but but not too much that the Fed would consider ending their bond buying program. The increase in the unemployment rate was a bit of a negative surprise, but it was partially due to a increase in the participation rate – something we hadn’t seen much of in a long time. This means more people who had given up on looking for employment, reentered the job market. That would be a good trend, but again, too much good news might scare investors since the Fed would be more likely to pull back on their $85 billion a month monetary policy. We’ve become an entitlement nation and the stock market is no exception. They want that $85 billion each month and a strong economy could get in the way of that. Ironic, isn’t it?

Tom Crowley
Weekly Wrap-Ups Archive
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