Stocks were mixed on Thursday with the Dow losing 50-points, the S&P 500 finishing with a small loss, while the small caps and Nasdaq posted small gains. With volume being extremely light because of the half day of holiday trading, the indices were easily pushed around and most of the early gains on Thursday were given back in the last 30 minutes of trading.
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The positive holiday seasonality played out nicely last week as we saw gains of 2% to 3% in the TSP stock funds.
While there is a lot more green showing on this and the December charts through the end of the month, in more recent years the tendency has been to see stocks move in one direction the week before Christmas, and in the other the week after, although the overall bias has been positive. This chart includes data from 1950-2011.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
Today is trading day #19 in December, but since this year December has 22 trading days, we'll look at the final 4 trading days from day #18 to #21 for comparison. Since any random day of the year is up +52.7% of the time, this week is only slightly more positive than random, except for day #19 which is +65% historically. And with last week being positive, the recent years' data might indicate a better chance of some losses.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
The index charts below charts look extremely compelling with strong cases on both sides for a big move - in either direction, to start 2016.
The SPY (S&P 500 / C-Fund) closed below the recent descending resistance line after breaking above the 20, 50, and 200-day EMAs before Christmas. This chart doesn't look too bad, but so many of the others do so it's difficult to get too optimistic here.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The weekly chart of the S&P 500 closed back above the 50-week moving average and it has formed a very large bull flag.
Chart provided courtesy of www.stockcharts.com,
The concern with last week's rally is that it was a seasonal thing and the larger trend was down before this possible pre-holiday reversal. There is a string tendency for stocks to move in one direction before a holiday, and in another after, but technically this week is between holidays.
That pre-holiday reversal may also be seen in the price of oil, which has been falling precipitously for weeks / months before its pre-holiday rally, which may have been what helped ignite the rally in stocks last week.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Completion Index (small caps / S-Fund) also reverse up from its larger down trend. In the process it has created a bear flag, and remains below the 50-day EMA.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Despite the gains, the Dow Transportation Index remains below all of its major moving averages.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-fund) opened a new gap last week and is flirting with its 50-day EMA. There's a possible bear flag here, but I decided to look at the 4 major overseas stock markets to show the negative technical pictures they have to face this week.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The German DAX, French CAC, London FTSE, and the Japanese Nikkei are all trading below their 50-day EMAs and I would say all but the FTSE are in bear flags. This week's action may be key, despite the holiday trading. Perhaps if they can recapture the 50-day EMAs, the technical damage can be mended, but as of now this looks like trouble.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The HYG High Yield Bond Fund also rallied last week but like many of the stock indices, continues to have technical chart issues.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-Fund) were up slightly on Thursday and seems to be on hold waiting to see which way stocks will break Bonds will likely go in the other direction.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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. We'll see you back here tomorrow.
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.
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The positive holiday seasonality played out nicely last week as we saw gains of 2% to 3% in the TSP stock funds.
While there is a lot more green showing on this and the December charts through the end of the month, in more recent years the tendency has been to see stocks move in one direction the week before Christmas, and in the other the week after, although the overall bias has been positive. This chart includes data from 1950-2011.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
Today is trading day #19 in December, but since this year December has 22 trading days, we'll look at the final 4 trading days from day #18 to #21 for comparison. Since any random day of the year is up +52.7% of the time, this week is only slightly more positive than random, except for day #19 which is +65% historically. And with last week being positive, the recent years' data might indicate a better chance of some losses.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
The index charts below charts look extremely compelling with strong cases on both sides for a big move - in either direction, to start 2016.
The SPY (S&P 500 / C-Fund) closed below the recent descending resistance line after breaking above the 20, 50, and 200-day EMAs before Christmas. This chart doesn't look too bad, but so many of the others do so it's difficult to get too optimistic here.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The weekly chart of the S&P 500 closed back above the 50-week moving average and it has formed a very large bull flag.
Chart provided courtesy of www.stockcharts.com,
The concern with last week's rally is that it was a seasonal thing and the larger trend was down before this possible pre-holiday reversal. There is a string tendency for stocks to move in one direction before a holiday, and in another after, but technically this week is between holidays.
That pre-holiday reversal may also be seen in the price of oil, which has been falling precipitously for weeks / months before its pre-holiday rally, which may have been what helped ignite the rally in stocks last week.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Completion Index (small caps / S-Fund) also reverse up from its larger down trend. In the process it has created a bear flag, and remains below the 50-day EMA.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Despite the gains, the Dow Transportation Index remains below all of its major moving averages.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-fund) opened a new gap last week and is flirting with its 50-day EMA. There's a possible bear flag here, but I decided to look at the 4 major overseas stock markets to show the negative technical pictures they have to face this week.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The German DAX, French CAC, London FTSE, and the Japanese Nikkei are all trading below their 50-day EMAs and I would say all but the FTSE are in bear flags. This week's action may be key, despite the holiday trading. Perhaps if they can recapture the 50-day EMAs, the technical damage can be mended, but as of now this looks like trouble.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The HYG High Yield Bond Fund also rallied last week but like many of the stock indices, continues to have technical chart issues.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-Fund) were up slightly on Thursday and seems to be on hold waiting to see which way stocks will break Bonds will likely go in the other direction.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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. We'll see you back here tomorrow.
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.
