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Three charts to watch following October’s jobs report

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The mixed employment data that came out from today’s jobs report (NFP) has kept things pretty calm in the FX market.

The Dollar Index hardly moved (slightly up and down) and except for GBPUSD, it was a pretty boring trading day for Forex traders.

The most interesting moves this week came from the Stocks and Bonds markets.

Here’s a brief summary and three charts that you must see:

Bearish Signals from the S&P500

At the beginning of this trading week, SPX was pretty close to complete two bearish harmonic trading patterns that I’ve mentioned here in my previous analyses:

weekly markets analysis

SPX daily chart (End of September)

The first warning signal this week came on Wednesday – SPX has generated a double top pattern and a daily Pinbar.

On the next day (Thursday) the seller seized that Pinbar to drive SPX below the Fast MA line (yellow).

That close below the MA line (for the first time in weeks) was the second bearish signal that investors and traders received from the market – If you follow the Market Zone’s Facebook Page– You probably saw the special post about it.

 

The continuation move came following today’s jobs report.

The S&P500 tried to climb back up above the MA line, failed, and turned back down to test the next supporting line – The 50 days MA line.

 

weekly markets analysis

SPX – Closed below support

The S&P500 can climb back up from here – The 50 MA line is a support line (as long as the price stays above it).

But now, SPX has 3 elements above it that should act as resistance in case of an attempted rally:

  1. 2 broken uptrend line (light green)
  2. The daily Fast MA line

SPX upside potential is now more limited than it was last week and if you are holding stocks, you need to be familiar with this technical fact.

Bearish Signal from the Nasdaq

The tech sector took most of the beating this week.

Tech companies are being sold while Investors shift money to the Financials Sector (XLF is in green for the week as I am writing this post).

That can be also explained due to the rise in Bonds Yields (see TLT chart analysis below).

weekly markets analysis

Nasdaq generated more bearish signs

The Nasdaq’s price broke below another supporting element today – NAS100 is below the 50 MA line.

The 50 MA line has been acting as support up until today (see the green arrows above) but now it has the potential to become resistance.

When you add previous bearish signals to the equation (double top and the close below the trend lines), it looks like NAS100 course is set towards the weekly uptrend line and the 200 days MA line.

Bonds Yield Rise To Multi-Years Highs

The last chart, and probably the most interesting one, comes from the Bonds market.

I’ve been mentioning a weekly giant Head & Shoulders pattern in TLT for a while now…. this week, the pattern was triggered:

weekly markets analysis

TLT Triggers H&S pattern

This chart can be added to the potential bearish signals that we saw in the other charts above.

Usually, the Financials Sector benefits from bearish moves in TLT.

That perhaps explains the strength we saw in XLF this week.

It will be interesting to see the impact of the drop in TLT when the major Banks will report next week.

Summary

Things aren’t looking great for stocks when you analyze the daily time frame.

Obviously, we are still in a bullish market and the weekly trend is still bullish.

Such dips can create opportunities.

But, also, such warning signals that we get from lower time frames can develop and turn to weekly and monthly signals that you do not want to miss… especially in a stretched market that got buyers used to buy every dip.

Right now SPX is presenting a Buy The Dip opportunity.

Will you take it or play more cautious?

 


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