We got the buy the news reaction to the impeachment vote, but we never really saw any sell the rumor side. After a couple of flat days the bull market rally kicked into gear again and we saw solid gains across the board, although the I-fund lagged a bit. The Dow gained 138-points. Bonds were up after a slow start in the morning.
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[TD="align: center"] Daily TSP Funds Return
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[TD="align: right"] [/TD]
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The Santa Claus rally seems to have gotten off to an early start this year, so the question now is, when the normal December 21 - 31 Santa Claus rally period officially begins, will we be thrown a curveball like the prior three years, or will the holiday rally keep moving along?
I've had a good year returns-wise in my TSP account, but compared to what the indices and the C and S funds did, it was not as impressive. An instinct would be to try to catch up, and that may be what we're seeing here to end the year. From what I'm reading, a lot of other investors missed a lot of the rally too and they are in the process of chasing, particularly with the Fed, impeachment, and trade uncertainty pretty much out of the way. But is it too late to board that train?
2018 was a bad year for stocks, particularly the way it ended with that 20% decline right toward the end of December. So, like an overprotective parent, I found myself overprotecting my account in 2019 instead of letting it join the party as much as it wanted to. Sometimes you worry too much about the consequences of bad behavior, which seems so much worse than "normal" behavior, that you spend your time trying to protect your account, even when it wasn't quite necessary.
We have almost made it through 2019 and the numbers look great with 7 trading days to go. There were some incidences during the year, but the start and finish were so strong that the returns ended much higher than most anticipated, particularly after what happened at the end of 2018.
It's like the cycle of emotions chart that we often post here. Just when you think everything is safe and everyone looks like they're having fun, and you want your account to join in the party, that's when the market can humble us. That's when you have to be that good parent again and go back into protection mode while the rest of the partiers are starting to get a little silly. I saw one guy with a lampshade on its head so that's a sign that it may be getting late.
I'm still concerned about 2020, and of course because the party is still roaring right now, it doesn't seem like the correct attitude. But I'll still pick my spots, hit and run while protecting my account when possible. You never know when the cops are going to be banging on the door to end the fun, and it would only be a matter of time before some accounts start to come down from their highs and start feeling those market peak hangovers.
In Thursday's TSP Talk Plus report I mentioned the January Barometer - which is difference than the January Effect we talked about here yesterday. The first few days in January tend to set the tone for the New Year, so it will be very interesting to see how we come off this end of year rally in a couple of weeks, and start the new year. If the first week of 2020 is another round of gains, then I may be wrong about this whole 2020 recession thing. But if we see a lot of red in those first 3 to 5 trading days in January, be careful.
One caveat: The January Barometer worked well in 2019 since stocks rallied to start the year, but they also rallied to start January of 2018, which was not a good year for stocks. So again, just when you think you have a reliable tendency...
The S&P 500 (C-fund) stalled for a couple of days but that only created another small bull flag, which broke out on Thursday. The index hit another new high and is clearly extended. The question is whether there will be any bears around over the next two weeks to do anything about it.
The DWCPF (S-fund) finally made a new all-time high yesterday as the index pushed back over 1500. The S-fund is really a small and mid-cap fund so while it made its new high...
... the Russell 2000 (chart not available so I use the equivalent ETF IWM) is still behind its all time highs. The reason this is meaningful to me is because the Russell 2000 is a much more followed index than DWCPF, so it's possible that even if we do get a double top in the Russell, the DWCPF (our S-fund) may not stall until the Russell does.
The EFA / I-fund was flat, as was the dollar, which finally stalled after a decent rally off its recent lows. I would love to see this pull back deeper into that rising trading channel because, despite the recent short-term rally in the dollar, it (the dollar) looks like it may still be vulnerable to a longer term decline, and that's when I'd want to be in the I-fund.
The AGG (F-fund / bonds) was down early on Thursday but bounced back after again successfully testing the 50-day EMA. The action also kept the bull flag intact.
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. 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
Thanks for reading. Have a great weekend!
Tom Crowley
Posted daily at www.tsptalk.com/comments.php
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.
[TABLE="align: center"]
[TR]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[TD][/TD]
[TD="align: center"]
[/TR]
[/TABLE]
The Santa Claus rally seems to have gotten off to an early start this year, so the question now is, when the normal December 21 - 31 Santa Claus rally period officially begins, will we be thrown a curveball like the prior three years, or will the holiday rally keep moving along?
I've had a good year returns-wise in my TSP account, but compared to what the indices and the C and S funds did, it was not as impressive. An instinct would be to try to catch up, and that may be what we're seeing here to end the year. From what I'm reading, a lot of other investors missed a lot of the rally too and they are in the process of chasing, particularly with the Fed, impeachment, and trade uncertainty pretty much out of the way. But is it too late to board that train?
2018 was a bad year for stocks, particularly the way it ended with that 20% decline right toward the end of December. So, like an overprotective parent, I found myself overprotecting my account in 2019 instead of letting it join the party as much as it wanted to. Sometimes you worry too much about the consequences of bad behavior, which seems so much worse than "normal" behavior, that you spend your time trying to protect your account, even when it wasn't quite necessary.
We have almost made it through 2019 and the numbers look great with 7 trading days to go. There were some incidences during the year, but the start and finish were so strong that the returns ended much higher than most anticipated, particularly after what happened at the end of 2018.
It's like the cycle of emotions chart that we often post here. Just when you think everything is safe and everyone looks like they're having fun, and you want your account to join in the party, that's when the market can humble us. That's when you have to be that good parent again and go back into protection mode while the rest of the partiers are starting to get a little silly. I saw one guy with a lampshade on its head so that's a sign that it may be getting late.
I'm still concerned about 2020, and of course because the party is still roaring right now, it doesn't seem like the correct attitude. But I'll still pick my spots, hit and run while protecting my account when possible. You never know when the cops are going to be banging on the door to end the fun, and it would only be a matter of time before some accounts start to come down from their highs and start feeling those market peak hangovers.
In Thursday's TSP Talk Plus report I mentioned the January Barometer - which is difference than the January Effect we talked about here yesterday. The first few days in January tend to set the tone for the New Year, so it will be very interesting to see how we come off this end of year rally in a couple of weeks, and start the new year. If the first week of 2020 is another round of gains, then I may be wrong about this whole 2020 recession thing. But if we see a lot of red in those first 3 to 5 trading days in January, be careful.
One caveat: The January Barometer worked well in 2019 since stocks rallied to start the year, but they also rallied to start January of 2018, which was not a good year for stocks. So again, just when you think you have a reliable tendency...
The S&P 500 (C-fund) stalled for a couple of days but that only created another small bull flag, which broke out on Thursday. The index hit another new high and is clearly extended. The question is whether there will be any bears around over the next two weeks to do anything about it.
The DWCPF (S-fund) finally made a new all-time high yesterday as the index pushed back over 1500. The S-fund is really a small and mid-cap fund so while it made its new high...
... the Russell 2000 (chart not available so I use the equivalent ETF IWM) is still behind its all time highs. The reason this is meaningful to me is because the Russell 2000 is a much more followed index than DWCPF, so it's possible that even if we do get a double top in the Russell, the DWCPF (our S-fund) may not stall until the Russell does.
The EFA / I-fund was flat, as was the dollar, which finally stalled after a decent rally off its recent lows. I would love to see this pull back deeper into that rising trading channel because, despite the recent short-term rally in the dollar, it (the dollar) looks like it may still be vulnerable to a longer term decline, and that's when I'd want to be in the I-fund.
The AGG (F-fund / bonds) was down early on Thursday but bounced back after again successfully testing the 50-day EMA. The action also kept the bull flag intact.
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. 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
Thanks for reading. Have a great weekend!
Tom Crowley
Posted daily at www.tsptalk.com/comments.php
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.
