11/23/11
Stocks could not muster a relief rally. The Dow lost 54-points, and the loss makes it 5 down days in a row for the S&P 500. The holiday shortened week begins its 2-day seasonal strong period so we'll see if that streak can be broken today.
For the TSP, the C-fund lost 0.41% yesterday, the S-fund fell 0.63%, the I-fund dropped 0.31%, and the F-fund (bonds) added gained 0.03%.
The S&P 500 is broken and the other day I mentioned that there is not a lot of support below. We are seeing some support connecting the August and September highs, but while this support is a bit "iffy", its held for 2 days.
The indicators are clearly oversold and it could be the start of a new leg down, but we are due for at least a short-term relief rally. the question will be how the indices react to the new overhead resistance.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The dollar continues to squeeze into the apex of a rising wedge pattern. Rising wedges are normally bearish so we'll have to see how this one breaks. Obviously a break down in the dollar would likely help the stock market, where a breakout to the upside would put more pressure on stocks.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Here is another look at the seasonality data surrounding Thanksgiving Day going back to 1950.
Chart provided courtesy of www.sentimentrader.com
And here is some more specific data. The right hand column shows the return of Wednesday and Friday combined, where there are 17 positive returns vs. 6 negative going back to 1988.
According to sentimenTrader.com, there have been 10 times since 1950 that the S&P lost -1% or more the Monday before Thanksgiving. 8 of the 10 showed a positive return from Monday's close through Friday's, averaging +1.1%. The losses were -1.3% and -0.1%.
Also, whenever the S&P has dropped 4 days in a row any time in November, with the 4th day having the largest loss, over the next week the index showed a positive return 81% of the time (13 out of 16 occurrences), averaging +0.8%. The next day was up 56% of the time, and from 2-4 days 75% of the time. Obviously we have already had a 5th down day.
All that said, I see the overnight futures are getting clobbered again on Tuesday night, so perhaps all of this seasonality will be a strikeout this year.
I am not sure if I will posting a report on Friday yet. I doubt many people will be reading and I will be out of town. We'll see how things go in the market today and any if there are any development in overseas markets. I will post any updates to the premium service reports as needed, and also post the sentiment survey results.
Thanks for reading! I hope everyone has a safe and happy Thanksgiving weekend.
Tom Crowley
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