12/19/12
Stocks rallied yesterday as it seems as if the market is pricing in a deal being made in the fiscal cliff negotiations. The Dow jumped 115-points and we saw 1% to 2% gains in most of the major stock indices.
[TABLE="align: center"]
[TR]
[TD]
[/TD]
[TD="align: center"]
Daily TSP Funds Return[TABLE="width: 150"]
[TR]
[TD="align: right"] G-Fund:
[/TD]
[TD="align: right"] 0.0036%
[/TD]
[/TR]
[TR]
[TD="align: right"] F-fund:
[/TD]
[TD="align: right"] -0.21%
[/TD]
[/TR]
[TR]
[TD="align: right"] C-fund:
[/TD]
[TD="align: right"] 1.15%
[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:
[/TD]
[TD="align: right"] 1.43%
[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:
[/TD]
[TD="align: right"] 0.76%
[/TD]
[/TR]
[/TABLE]
[TABLE="align: center"]
[TR]
[TD="align: right"]
[/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The S&P 500 broke above the overhead resistance I was a little concerned with, and it did it rather easily with not much headline news to help it. If this is a "buy the rumor" rally, we will have to be prepared for a possible "sell the news" reaction if a deal is reached.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Transportation Index was probably most impressive. It broke above resistance that took months to develop.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The bigger picture shows just how impressive this move was. The question here is whether this is a fake-out like we saw back in July and November? Back in July, when we saw that breakdown, there wasn't 7-months of support to help it, and in November the breakdown was only intraday, so this is a more "stable" breakout.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The obvious problem is that the Transports have gone from 4840 to 5311 in one month. That's 10%, so does it have anything left to keep it going, or will it need some consolidating? If it does consolidate, the bulls will not want to see it dip back below 5200.
The Nasdaq, which has been lagging, broke out of its inverted head and shoulders pattern yesterday. Like the Transports, the bulls will want to see that neckline hold on any pullback.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Here are a couple of other charts that showed something a little special yesterday...
The Housing Index made a new high; breaking above its 3-month consolidation. A similar breakout occurred in July and the index rallied nearly 30% in a little over 2 months. Housing is obviously an important piece to the economic pie so this is good news for the bulls.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The yield on the 10-Year Treasury closed above the 200-day EMA for the only the second time since early April. Higher yields put pressure on Bond prices and the F-fund.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Like the stock market bulls, the bond market bears will want to see the yields hold above this 200-day EMA. It won't break above its trading channel until it hits the 1.9% level - a level it hasn't seen since May.
The charts look good but starting to get overbought (although not extreme yet.) We saw some key breakouts but we could be setting up for a "sell the news reaction" if and when a deal on the fiscal cliff is reached. And if a deal isn't reached... The Santa Claus rally has started, but we have to keep in mind that capitals gains tax rates are going up next year so there is still a chance of late December selling.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.html
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.
Stocks rallied yesterday as it seems as if the market is pricing in a deal being made in the fiscal cliff negotiations. The Dow jumped 115-points and we saw 1% to 2% gains in most of the major stock indices.
[TABLE="align: center"]
[TR]
[TD]
[TD="align: center"]
Daily TSP Funds Return[TABLE="width: 150"]
[TR]
[TD="align: right"] G-Fund:
[/TD]
[TD="align: right"] 0.0036%
[/TD]
[/TR]
[TR]
[TD="align: right"] F-fund:
[/TD]
[TD="align: right"] -0.21%
[/TD]
[/TR]
[TR]
[TD="align: right"] C-fund:
[/TD]
[TD="align: right"] 1.15%
[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:
[/TD]
[TD="align: right"] 1.43%
[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:
[/TD]
[TD="align: right"] 0.76%
[/TD]
[/TR]
[/TABLE]
[TABLE="align: center"]
[TR]
[TD="align: right"]
[/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The S&P 500 broke above the overhead resistance I was a little concerned with, and it did it rather easily with not much headline news to help it. If this is a "buy the rumor" rally, we will have to be prepared for a possible "sell the news" reaction if a deal is reached.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Transportation Index was probably most impressive. It broke above resistance that took months to develop.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The bigger picture shows just how impressive this move was. The question here is whether this is a fake-out like we saw back in July and November? Back in July, when we saw that breakdown, there wasn't 7-months of support to help it, and in November the breakdown was only intraday, so this is a more "stable" breakout.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The obvious problem is that the Transports have gone from 4840 to 5311 in one month. That's 10%, so does it have anything left to keep it going, or will it need some consolidating? If it does consolidate, the bulls will not want to see it dip back below 5200.
The Nasdaq, which has been lagging, broke out of its inverted head and shoulders pattern yesterday. Like the Transports, the bulls will want to see that neckline hold on any pullback.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Here are a couple of other charts that showed something a little special yesterday...
The Housing Index made a new high; breaking above its 3-month consolidation. A similar breakout occurred in July and the index rallied nearly 30% in a little over 2 months. Housing is obviously an important piece to the economic pie so this is good news for the bulls.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The yield on the 10-Year Treasury closed above the 200-day EMA for the only the second time since early April. Higher yields put pressure on Bond prices and the F-fund.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Like the stock market bulls, the bond market bears will want to see the yields hold above this 200-day EMA. It won't break above its trading channel until it hits the 1.9% level - a level it hasn't seen since May.
The charts look good but starting to get overbought (although not extreme yet.) We saw some key breakouts but we could be setting up for a "sell the news reaction" if and when a deal on the fiscal cliff is reached. And if a deal isn't reached... The Santa Claus rally has started, but we have to keep in mind that capitals gains tax rates are going up next year so there is still a chance of late December selling.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.html
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.
