The normally strong Friday after Thanksgiving Day started off well, but sellers stepped up and while the Dow held on to a fractional gain, the S&P 500, small caps, and international stocks all saw moderate losses by the close. Bonds had a good day.
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The final returns for December are in and both stocks and bonds had a good month. The C-fund led the way with a 2.7% gain in December, while the I-fund lagged with a 0.51% gain - much of that had to do with strength in the dollar.
Seasonality cools of for a few weeks until we get into the week of Christmas.
The SPY (S&P 500 / C-fund) broke above the resistance of the inverted head and shoulders' neckline last week, but we can't always trust pre-holiday action. The 3 to 5 day confirmation has successfully passed, but as I mentioned last week, we' should make an exception because of the holiday and give it another day or two to prove itself.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) flirted with a breakout above the neckline but Friday's losses took it back below the resistance.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Russell 2000 (small caps) hit a wall last week despite the strong seasonality. The 1.46% decline on Friday took it down to the rising support line from the October lows. It could be a good test for the small caps and the market in general.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-fund) has been holding tough considering it has been in a bear market and the dollar has been strong. But it hit the 200-day EMA last week and this will be a test for the I-fund going forward. The I-fund is the only TSP fund in the red this year.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Here is the historical performance surrounding Thanksgiving Day. Today is day (+2) and it has some issues, historically.
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) had a big day on Friday hitting its highest close since ever, despite those huge intraday spikes higher we saw in October. That surprises me but like stocks, the pre-holiday trading could be a fake-out.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The longer-term chart shows the dominant trend is up and the parallel trading channel, which has been broken a few times, is currently intact and the AGG is nearing the top of that channel.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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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.
