Just another 500-point loss for the Dow to start the week and so there's still no signs of that Santa Claus rally. There was no news on the trade front, and of course the Fed's FOMC meeting starts today but we don't get their decision on interest rates until later on Wednesday, so the market may be in need of a catalyst. The dollar dipped helping the I-fund a bit, and bonds rallied as yields eased back from some resistance.
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It's been getting brutal out there and we may be at or close to that "get me out at any price" investor mentality. About 30% of stocks on the NYSE are at 52-week lows, which is something we haven't seen in a long time. It hasn't been panicky per se, but 2% declines day after day has a way of numbing the bulls and added together we've seen a 9% decline in the S&P 500 in the last two-weeks. So, at some point, possible here now, anyone who was going to sell, may have already done so - or close to it. That's what can trigger a rally. Did I mention we do have the potential for a government shut-down by the end of the week? Gulp!
We still didn't get that "puking" flush out type day, so that's always a possibility, but we're getting the Fed tomorrow, and the bears may be taking their profits and heading on their vacations very soon leaving that seasonally strong period for the bulls to potentially pick up some crumbs over the holidays. But after the holidays, be careful. This bear market may just be getting started.
This has been the worst start to a December since 1980, and looking at a chart from back then shows a bounce back in the second half of the month, although it's interesting that it was rather flat during the period between Christmas and New Years.
So yes... it does matter that this is happening in the second half of December. It would likely play out differently if this was say, August.
The S&P 500 / C-fund broke below key support yesterday and finally fell all the way down to...
... the lows from last February. This still looks like a potential large head and shoulders pattern, which would be a bad thing, but it could still get a bounce off this level. If we're looking for targets I did see that there is an open gap down near 2467 from back in September of 2017.
It's not easy to see on that chart but if wee zoom in you can see that it is a gap of about 11-points, which is significant.
The DWCPF (S-fund) broke down like the rest of them. Not much more to say except that, except for the ugly chart, it may be due for some short-term relief.
The I-fund (EAFE Index) held up a little better than U.S. stocks as the dollar was down on the day, but also, U.S. stocks were not down too much when many of those markets closed.
The yield on the 10-year treasury pulled back after failing at the 200-day EMA...
And that helped the AGG (bonds /F-fund) poke its head above the August highs. This may or may not have something to say about the economy, inflation, and interest rates, but more to do with investors moving out of stocks and into the safe haven of bonds.
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 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.
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[TD="width: 253, align: center"] Daily TSP Funds Return
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It's been getting brutal out there and we may be at or close to that "get me out at any price" investor mentality. About 30% of stocks on the NYSE are at 52-week lows, which is something we haven't seen in a long time. It hasn't been panicky per se, but 2% declines day after day has a way of numbing the bulls and added together we've seen a 9% decline in the S&P 500 in the last two-weeks. So, at some point, possible here now, anyone who was going to sell, may have already done so - or close to it. That's what can trigger a rally. Did I mention we do have the potential for a government shut-down by the end of the week? Gulp!
We still didn't get that "puking" flush out type day, so that's always a possibility, but we're getting the Fed tomorrow, and the bears may be taking their profits and heading on their vacations very soon leaving that seasonally strong period for the bulls to potentially pick up some crumbs over the holidays. But after the holidays, be careful. This bear market may just be getting started.
This has been the worst start to a December since 1980, and looking at a chart from back then shows a bounce back in the second half of the month, although it's interesting that it was rather flat during the period between Christmas and New Years.
So yes... it does matter that this is happening in the second half of December. It would likely play out differently if this was say, August.
The S&P 500 / C-fund broke below key support yesterday and finally fell all the way down to...
... the lows from last February. This still looks like a potential large head and shoulders pattern, which would be a bad thing, but it could still get a bounce off this level. If we're looking for targets I did see that there is an open gap down near 2467 from back in September of 2017.
It's not easy to see on that chart but if wee zoom in you can see that it is a gap of about 11-points, which is significant.
The DWCPF (S-fund) broke down like the rest of them. Not much more to say except that, except for the ugly chart, it may be due for some short-term relief.
The I-fund (EAFE Index) held up a little better than U.S. stocks as the dollar was down on the day, but also, U.S. stocks were not down too much when many of those markets closed.
The yield on the 10-year treasury pulled back after failing at the 200-day EMA...
And that helped the AGG (bonds /F-fund) poke its head above the August highs. This may or may not have something to say about the economy, inflation, and interest rates, but more to do with investors moving out of stocks and into the safe haven of bonds.
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 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.
