2016 ended in the same direction that it started... down. The good news was that much of what happened in between was quite bullish. The Dow closed on Friday down 57-points and we saw moderate losses in the S&P 500, small caps, and more so the Nasdaq.
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The last three Januaries have been rough and the momentum going into the New Year shows investors aren't exactly excited about the prospects of this January. However, historically January has a pretty good record and the average start to a New Year has a positive bias. The action can be wild during the first few trading days so up or down, we could see some significant moves. The overnight futures opened moderately higher but we can't always trust that to hold into the open in the morning.
Chart provided courtesy of www.sentimentrader.com
Some administrative notes: RevShark's Annual (not monthly) Premium Service, TSP Timing, is on sale this week for 33% off the regular price. James "RevShark" Deporre is a real pro and his service is our longest running premium service on TSP Talk. It started in 2006. For more information about the RevShark and the sale, please go to www.tsptalk.com/revshark_sale.php.
For those interested in some annual little contests we have, the "2017 Guess the Dow" contest is going on now in the Forum and the deadline for an entry is Friday at 4 PM ET. Forum member Frixxx won the 2016 contest with a guess of 19,841. The Dow ended the year at 19,763. Pretty close! More info
Also, if you are not on the AutoTracker or have not updated your AutoTracker account allocation recently, today would be a good day to do that. Getting onto the AutoTracker for the full year will help you compare your return the TSP Funds' returns, and other members for the full year. You can get on the AutoTracker anytime but to be tracked from the start of the year I will need you to get your allocation (IFT) posted by 7 PM ET today. Important: If you are just getting started please make sure you put "Start Jan 3 2017" in the comments line of the IFT page, otherwise it will post as an IFT Close of Business (COB) Tuesday or Wednesday, depending on the time you enter it. Writing "Start Jan 3 2017" on the comments line will assure you are in starting day one (COB last Friday). If your account is active and the allocation is up to date, there's no need to change anything.
More info:
How to get added to the AutoTracker
Update your account allocation (not your actual TSP account.)
We also have spreadsheets available to download if you wish to track your own return.
The SPY (S&P 500 / C-fund) was down solidly on Friday although there was a minor late reversal near the close, but not enough to call it a positive reversal day. Volume was up some but that was likely a combination of last minute window dressing, tax selling, and those pension funds reallocating. As weak as the action was to end the year - potentially see the indices starting to rollover, there is a bullish case with the bull flag we see formed (blue).
The weekly chart shows what we talked about the last couple of weeks. Despite the rising trend, there was a lot more room on the downside in that trading channel, after it had hit resistance a couple of weeks ago.
The monthly chart shows the even more dramatic rising long term bull market. Yes, there are always corrections and even 20% declines that some call bear markets along the way, but since the market bottomed in 2009, the trend has clearly been up.
The DWCPF (S-fund) is also forming a bull flag but it will be more bullish if the 20-day EMA held up. The 50-day MA is too far down to be part of the bull flag.
The Dow Transportation Index and the Nasdaq 100 (QQQ) both pulled back to end the year and these market leaders need to improve or the rest of the market will not likely do well. The 50-day EMA held on the QQQ.
The EFA (I-fund) was actually up big early on Friday because the dollar broke down in early trading. But as the day went on the dollar reversed higher and the EFA slipped back down. It did mange to close just above the bearish flag we have been watching.
The dollar (UUP).
The AGG (bonds / F-fund) continued to bounce off the lows and the portfolio rebalancing really helped. Bonds were cheap and stocks were getting expensive so the relocation in funds helped bonds end the year on a positive note. This could last a bit longer but I am not optimistic about bonds for 2017.
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.
