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| Today's Commentary |
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Rebound after weak jobs report
sell-off Stocks opened sharply lower on Friday after the weaker than expected jobs report. If you missed it, there were 131,000 jobs lost in July - about 44,000 more than expected. The Dow was down 120 to 160 points most of the day, but a late afternoon rally recouped most of the losses and the Dow closed down a modest 21-points.  For the TSP, the C-fund and the S-fund both lost 0.36%, while the I-fund added 0.34% with the dollar being down again. The F-fund (bonds) was up 0.24% as yields continue to fall. For more on the weekly and monthly returns, please see our TSP Weekly Wrap-up. Last night I saw an article on the Financial Times website that said, "The Federal Reserve is set to downgrade its assessment of US economic prospects when it meets on Tuesday to discuss ways to reboot the flagging recovery." It sure sounded like bad news to me, but I checked the overnight futures and they were basically flat. The question I have when the market does not react to news that I expect should affect it is, has the market already priced this in? Remember, the market is a forward looking indicator and many times the news reacts to the market instead of the other way around. If interested, you can read the ft.com article here. This is the same chart that I posted in the TSP Weekly Wrap-up. Again the news and jobs report may have a short-term affect on the market movement, but right now the boundaries of the rising wedge and that overhead resistance are telling the story.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk I talked about the rising wedge in the TSP Weekly Wrap-up and if you had a change to read it, you know that we are dealing with tendencies here. The market will do whatever it is going to do, but with what the charts are showing, the tendencies are leaning toward more of a pullback in the coming days to weeks. A quick follow up on bond yields and the dollar: The yield on the 10-year T-Note finally broke down after dancing around the 2.9% rate for weeks. 
The dollar continued its weakness with another sharp decline on Friday...  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk| The TSP Talk Sentiment Survey came in at 53% bulls, 33% bears for a 1.61 to ratio last week. That keeps the system on a sell signal for this week. The big news is that the 50-day EMA recently moved back above the 200-day EMA so the system has switched back to bull market rules. That moves the buy signal ratio down to 1.24 to 1 or lower, and the sell signal to 2.0 to 1 or higher. The 1.61 to 1 is neutral so we stick with the prior week's signal. Since I started TSP Talk and writing these daily market commentaries in January 2004, about six and a half years ago, I have not actually taken any "real" vacations. The year before I went to Mexico for a week, and that was the last time I went a week without a PC, a laptop, or getting online at all. I don' think I have gone more than a day since. That includes a 3 or 4 night stretch when I was in the ICU a couple of years ago with Myocarditis (inflammation of the heart caused by a virus). When the tests showed it was not a heart attack, I talked the doctors into letting me use my laptop. This week I will be heading out of town for another semi-vacation. I will be updating the Premium Services' pages, the AutoTracker, Sentiment Survey, etc., but I will probably be just making brief updates to the market commentary each day. Then, when I get back next week, I am going in for some minor surgery (hernia), so I will be keeping a light schedule as well. I didn't know you could get a hernia sitting in front of a monitor 10-12 hours a day. OK, too much info.  Anyway, thanks in advance for your patience as I may not be on my regular schedule for the next two weeks. Thanks for reading! Tom Crowley |