12/21/12
Stocks rallied yesterday despite the pending end of the world today. The Dow gained 60-points but after hours last night (Thursday) stock futures plummeted after John Boehner could not get the votes needed to pass his fiscal cliff's "Plan B".
[TABLE="width: 88%, align: center"]
[TR]
[TD]
[/TD]
[TD="align: center"]Daily TSP Funds Return[TABLE="width: 153"]
[TR]
[TD]G-Fund:[/TD]
[TD="align: right"]0.0036%[/TD]
[/TR]
[TR]
[TD]F-fund:[/TD]
[TD="align: right"]-0.09%[/TD]
[/TR]
[TR]
[TD]C-fund:[/TD]
[TD="align: right"]0.57%[/TD]
[/TR]
[TR]
[TD]S-fund:[/TD]
[TD="align: right"]0.53%[/TD]
[/TR]
[TR]
[TD]I-fund:[/TD]
[TD="align: right"]0.43%[/TD]
[/TR]
[/TABLE]
[TABLE="width: 80%, align: center"]
[TR]
[TD="align: right"]More returns [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
Analysis at this point may be futile since yesterday's 8-point gain in the S&P 500 was quickly eaten up last night as the S&P futures are down about 24-points (Dow futures down over 200) as I write this Thursday night. The initial knee-jerk reaction to "Plan B" not getting passed was an astonishingy 50-point drop in the S&P futures, but as I said it eased to closer to -20 plus points.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Should the selling hold, next Monday's chart may show what a fiscal cliff looks like on a graph. It will look like a breakdown from a rising wedge (red above).
The Russell 2000 was rising along the upper end of its rising trading channel, but again, the analysis isn't worth much, unless a drop on Friday finds support at the bottom of the channel.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Before I heard the news about Plan B failing to get the votes and the overnight sell-off, sentimenTrader.com posted a chart that surprised me a little considering all that is at stake in these coming weeks.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
It shows investor's risk appetite, their willingness to take on risk, is at its highest point in about two years, and we know that when sentiment gets too bullish, it can be a better sign to get defensive then to jump into risk.
The holiday seasonality chart is negative today (Friday, day -2) but next week the numbers become very bullish with positive closings 60% to over 70% of the time.
Chart provided courtesy of www.sentimentrader.com
It's possible that the fiscal cliff scare last night will be a short-term emotional sell-off and give investors a good buying opportunity, but it could also be par for the course just before a country is about to go over the cliff. The fact that it is starting on December 21, 2012 is kind of interesting.
The two political parties are now further apart than ever in their negotiations and I think best case scenario now, unless they come to their senses sooner, is the country "goes over the cliff" which means higher taxes for everyone and huge spending cuts that will almost certainly trigger another recession. Then in January, President Obama will jump all over the opportunity to propose new tax cuts for everyone who makes under $250,000. That will put 98% of the country right back where they were in 2012 and it will keep taxes at the higher rates for those making over $250,000, which is what Obama wanted all along. And it would be tough for the republicans, some of whom are resistant to almost any tax increases, to not accept this deal since the alternative would be to keep taxes at the higher rates for everyone. I don't know what they'll do with the sequestered spending cuts so that is still a big question mark.
This sell-off will either be a really nice buying opportunity - if it even last into Friday's open - or it will be the beginning of the end of the bull market should we go over the cliff and have a new recession kick in. That's a nice way to start the end of the world, huh?
Thanks for reading! If the world does not end today, have a great weekend, and if I don't see you on Monday, have a Merry Christmas!
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.
Stocks rallied yesterday despite the pending end of the world today. The Dow gained 60-points but after hours last night (Thursday) stock futures plummeted after John Boehner could not get the votes needed to pass his fiscal cliff's "Plan B".
[TABLE="width: 88%, align: center"]
[TR]
[TD]
[TD="align: center"]Daily TSP Funds Return[TABLE="width: 153"]
[TR]
[TD]G-Fund:[/TD]
[TD="align: right"]0.0036%[/TD]
[/TR]
[TR]
[TD]F-fund:[/TD]
[TD="align: right"]-0.09%[/TD]
[/TR]
[TR]
[TD]C-fund:[/TD]
[TD="align: right"]0.57%[/TD]
[/TR]
[TR]
[TD]S-fund:[/TD]
[TD="align: right"]0.53%[/TD]
[/TR]
[TR]
[TD]I-fund:[/TD]
[TD="align: right"]0.43%[/TD]
[/TR]
[/TABLE]
[TABLE="width: 80%, align: center"]
[TR]
[TD="align: right"]More returns [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
Analysis at this point may be futile since yesterday's 8-point gain in the S&P 500 was quickly eaten up last night as the S&P futures are down about 24-points (Dow futures down over 200) as I write this Thursday night. The initial knee-jerk reaction to "Plan B" not getting passed was an astonishingy 50-point drop in the S&P futures, but as I said it eased to closer to -20 plus points.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Should the selling hold, next Monday's chart may show what a fiscal cliff looks like on a graph. It will look like a breakdown from a rising wedge (red above).
The Russell 2000 was rising along the upper end of its rising trading channel, but again, the analysis isn't worth much, unless a drop on Friday finds support at the bottom of the channel.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Before I heard the news about Plan B failing to get the votes and the overnight sell-off, sentimenTrader.com posted a chart that surprised me a little considering all that is at stake in these coming weeks.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
It shows investor's risk appetite, their willingness to take on risk, is at its highest point in about two years, and we know that when sentiment gets too bullish, it can be a better sign to get defensive then to jump into risk.
The holiday seasonality chart is negative today (Friday, day -2) but next week the numbers become very bullish with positive closings 60% to over 70% of the time.
Chart provided courtesy of www.sentimentrader.com
It's possible that the fiscal cliff scare last night will be a short-term emotional sell-off and give investors a good buying opportunity, but it could also be par for the course just before a country is about to go over the cliff. The fact that it is starting on December 21, 2012 is kind of interesting.
The two political parties are now further apart than ever in their negotiations and I think best case scenario now, unless they come to their senses sooner, is the country "goes over the cliff" which means higher taxes for everyone and huge spending cuts that will almost certainly trigger another recession. Then in January, President Obama will jump all over the opportunity to propose new tax cuts for everyone who makes under $250,000. That will put 98% of the country right back where they were in 2012 and it will keep taxes at the higher rates for those making over $250,000, which is what Obama wanted all along. And it would be tough for the republicans, some of whom are resistant to almost any tax increases, to not accept this deal since the alternative would be to keep taxes at the higher rates for everyone. I don't know what they'll do with the sequestered spending cuts so that is still a big question mark.
This sell-off will either be a really nice buying opportunity - if it even last into Friday's open - or it will be the beginning of the end of the bull market should we go over the cliff and have a new recession kick in. That's a nice way to start the end of the world, huh?
Thanks for reading! If the world does not end today, have a great weekend, and if I don't see you on Monday, have a Merry Christmas!
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.
