Stocks were cruising right along on Friday but an early afternoon news headline regarding the election pushed stocks off the table and the respectable early gains turned into some modest losses. The Dow gave up an 88-point gain and ended with an 8-point loss. Normally a positive boost for stocks, this election has been anything but, so far.
[TABLE="align: center"]
[TR]
[TD="align: center"]
[TD]
[/TD]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
You can see how stocks reacted right after the news that the FBI was going to reopen Hillary Clinton's email investigation. We know stocks tend to key on a specific catalyst at any given time, and right now how well Trump and Clinton are doing in the polls is front and center.
The early positive day on Friday was in line with the October 28 on the seasonality chart - until that announcement. Now we're down to the final trading day in October where there's no major edge either way over the last 30 years.
However, November is an historically good month for stocks, and the first week tends to do well.
The Election Year chart that we have been following did try to tell us that October could be rocky, although this year it was weaker than the averages. Typically, as you can see in the chart, November does very well during an election year, but this year's race has been anything but typical.
The SPY (S&P 500 / C-Fund) has been struggling and on Friday once again the charts failed at some key resistance. I talked about wanting to see a spike in volume in Friday's commentary, and the FBI headline did in fact give us a spike in volume. That could mean it was an overly emotional reaction. But if Wall Street is really concerned about Donald Trump winning the election, perhaps the emotional trading will continue until all the votes are counted. I'm still seeing that large bull flag, which could be a very bullish sign down the road, but it could still potentially try to test the lower end of the flag (and 200-day EMA) in the interim.
The weekly chart remains above some key support but the afternoon selling on Friday pushed last week's weekly bar below the prior week's creating a negative outside reversal bar. That's not the best sign, but as we said above, was it just an emotional move that will be reversed heading into the more bullish November?
The DWCPF (S-fund) has been lagging badly and it is now desperately trying to hold onto the 200-day EMA.
The Dow Transportation Index was flying high on Friday and looking to break out of its recent short-term downtrend. But it's funny how it works. Just as the Trannies were hitting the upper resistance, the FBI news came out. They did actually hold onto a small gain on the day and look somewhat promising holding above its 50-day EMA again.
The EFA (I-fund) has been slipping and appears to want to challenge the 200-day EMA. The dollar was down sharply on Friday, falling on the FBI news.
The AGG (Bonds / F-fund) broke down from a head and shoulders pattern last week and on Friday we saw them close basically flat. There's a big open gap above that may need attention, but it will have to break above some minor resistance to get there.
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.
