Stocks were flat on Tuesday with Dow losing 3-points, the S&P 500 giving up 2, and the Nasdaq up 3. Volatility has been very low with the holiday action in full force. But holiday reversals or fake-outs may be popping up.
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Small caps were also flat, and the I-fund led adding 0.5%. Bonds were up.
The SPY (S&P 500 / C-fund) closed slightly lower on Tuesday - above the resistance line for a 3rd straight day. The 3 to 5 day rule is in affect, and the reason to consider the 5 days (and probably even 6 in this case) is because of the holiday. Pre-holiday action tends to either reverse the major trend, or causes "fake-out" moves, that correct after the holiday. The chart looks very good here although very extended. The real direction may come on Monday once the holiday is behind us.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) temporarily broke above its resistance line, but closed dead even and just below the resistance line. Again, the holiday is having its impact and we just need to give it a few days to give us some real direction.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-fund) has broken above a rising wedge, which isn't typical, but again -- the holiday.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Here is the historical performance surrounding Thanksgiving Day. The day before and the day after have been consistently strong, while the Monday after the weekend tends to be one of the weaker days of the year. Today is day (-1). It's up nearly 80% of the time. That's about as good as it gets. It doesn't mean it will be up big, but it does average a gain of about 0.41%, which is very solid. Friday is nearly as positive. Monday, profit taking seems to kick in.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
The December seasonality chart shows that the month's big strength comes around Christmas and into New Years, but prior to that there is only one day of the month (trading day #3) that is up more than 55% of the time. So if there is going to be a pullback it may very well come in the first two or three weeks in December.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
The AGG (Bonds / F-fund) broke to the upside, but again, is it a pre-holiday action fake-out that will reverse next week?
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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Thanks for reading! Have a Happy Thanksgiving! The TSP is closed on Thursday and there is only a half day of trading on Friday. We'll be back on Friday with a brief update.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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