We saw a breakdown in the stock market on Thursday that seemed to be a topping turning point. That is until we got the October jobs report on Friday morning and investors did an about face and bought on this news. The stock indexes improved their technical picture but they are not out of the woods yet after this emotional rally, while the bond market may have turned a bearish corner.
The jobs report gave investors the best of both worlds. The number of jobs created in October was 204,000, which was more than double than what was expected. But the unemployment rate moved UP to 7.3%. Since investors know the Fed is looking for this number to move down toward 6% before they they will give up their bond buying program, a move up to 7.3% tells them that quantitative easing it not close to going away.
Here are the weekly, monthly, and annual TSP fund returns through Friday, November 8:
The S&P 500 (SPY) had fallen to the 20-day EMA on Thursday and that held as the jobs report rally bounced off of that EMA support and it is back flirting with new highs. It is also back above the old resistance line.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The longer-term chart of the S&P 500 shows just how extended the current bull market rally is as it is at the top of almost every trading channel – both short and long-term. This could be a concern for the TSP stock funds, even as we head into the stronger seasonal part of the year.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds broke down last week as the TLT 20+ year bond fund ETF broke below a couple of key support levels. There is a new open gap that could get filled in the short-term, but this breakdown is a concern for bonds and the F-fund. It is possible that the jobs report gave the bond market a temporary emotional sell-off that will repair itself in the coming week, but until we see these bond funds move back into the rising trading channels, we probably need to take a defense approach to the F-fund.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Happy Veteran’s Day to all our brave soldiers. Your service is truly appreciated! The TSP will be closed on Monday in observance of the holiday and will not process any transactions that day.
Good luck, and thanks for reading. We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at http://www.tsptalk.com/comments.html.
Tom Crowley
www.tsptalk.com
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The legal stuff: This information is for educational purposes only! This is not advice or are commendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
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