Friday saw a dull end to a strong holiday week for stocks. The indices were flat with the Dow losing 1-point and the S&P 500 down 0.62. Bonds were also flat but the I-fund had a big day.
[TABLE="width: 80%, align: center"]
[TR]
[TD="width: 300"]
[TD="align: center"] Daily TSP Funds Return[TABLE="width: 179"]
[TR]
[TD="width: 83, align: right"] G-Fund:[/TD]
[TD="align: right"] +0.0056%[/TD]
[/TR]
[TR]
[TD="width: 83, align: right"] F-fund:[/TD]
[TD="align: right"] -0.01%[/TD]
[/TR]
[TR]
[TD="width: 83, align: right"] C-fund:[/TD]
[TD="align: right"] -0.01%[/TD]
[/TR]
[TR]
[TD="width: 83, align: right"] S-fund:[/TD]
[TD="align: right"] -0.08%[/TD]
[/TR]
[TR]
[TD="width: 83, align: right"] I-fund:[/TD]
[TD="align: right"] +1.25%[/TD]
[/TR]
[/TABLE]
[TABLE="width: 69%, align: center"]
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
Thanks to weak open in the dollar and the early gains in U.S. stocks, the I-fund managed a 1.25% gain on Friday. The Japanese Nikkei has been strong of late, but the I-fund may be giving up some of Friday's gains today as the dollar closed much higher than it opened on Friday.
The S&P 500 (SPY) has made a very strong run since the Fed meeting and we've seen these kind of rallies last longer than we might think possible. Resistance is overhead but it is rising and there is still some room.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The longer-term chart shows a break above the longer-term resistance line, and this could be holiday trading related. We're still in the holiday season but realistically it seems like this can't go on forever. The market sure likes to get people to lean the wrong way and sentiment has been extremely bullish across almost all surveys.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq is overbought after hitting a level that has been tough to break through this year (+500), but what a run for this tech-heavy composite has had this year.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Today (Monday) is day +3 on this seasonality chart surrounding Christmas Day.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
The January chart shows a one-day positive outlier day on trading day #2, which will be Friday of this week. It is up nearly 75% of the time with one of the highest average returns of the year (nearly 0.5%). That is likely the result of a few very big days that skewed the results, as we see at the start of some years. For example, we started the first day in 2013 with a 308-point rally - although this chart only goes through 2011.
Chart provided courtesy of www.sentimentrader.com
Speaking of that, the January indicator - for lack of a better term - tells us that however January goes, often so goes the entire year. Moreover, as goes the first week of January, so goes the whole month of January, and so goes the rest of the year. Even further... as goes the first 2 or 3 days in January, so goes January, and so goes the year. With 2013 starting with a 300+ point gain, it's not a surprise that we had a big year for stocks. So, will January 2014 start strong again, or will it signal a year of give backs?
The bond charts continue to break down as yields move higher. The 10-year Treasury yield closed over 3% on Friday. That has been resistance in 2013, so will we see a breakout in yields and further deterioration in the bond market? Or will we see a relief rally in bonds and a pullback in yields?
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The longer-term chart of the TLT bond fund shows a large, ominous, bearish head and shoulders pattern.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The neckline could provide some support, but if that breaks, the downside target on this ETF would be near 85. That would put a big hurt on the F-fund.
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In today's TSP Talk Plus Report we look at the short and intermediate-term indicators, the sentiment survey results, plus the New Years Day seasonality chart.. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
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Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. 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.
