Stocks were up modestly midday on Friday, but there was a bit of a run for the exit in afternoon trading and into the close. The Dow ended the day with with a 92-point loss, while the week ended slightly positive, but the bulls may not want to say goodbye to a month that was so good to them.
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For the year, the returns aren't all that impressive with the C and I funds up 2.7% and 2.4% respectively, and the S-fund still in negative territory, but we saw a nice comeback after two challenging months in August and September.
If you timed these fluctuations right you could have beaten the market's returns handily and as many of you have seen, our Intrepid Timer premium service did just that and is now up 17.6% for the year while the best TSP fund is up 2.8%. People like to follow the hot hand so if you've inquired, you can understand why the service is sold out as Intrepid likes to keep the number of available subscriptions limited.
TSP Talk Plus and Coolhand's premium service are having good years as well, beating all of the TSP Fund's returns for the year, but certainly not the kind of year Intrepid Timer is having. But it shows you that trying to time the market vs. a buy and hold strategy can be beneficial if you have a good plan and stick to your plan, and that's why we do what we do.
The SPY (S&P 500 / C-fund) spent almost the entire month of October rallying off of the late September low. Back then, we were anticipating a test of the August low, and while we saw the the small caps (S-fund) and international stocks (I-fund) test those lows, the SPY did not, and the rally left many market timers behind. When the market rallies and many are left behind, you get money managers chasing the returns hoping not to get too far behind, and that can feed the rally. So the question heading into November is, will the rally continue or will we see some profit taking?
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The weekly chart of the S&P 500 closed above the 50-week moving average again, and there could be a question of whether the lower support line of the old rising trading channel will now act as resistance. It closed right on the line each of the last two weeks.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Zooming in shows that rare open gap on the weekly chart, and as I talked about on October 9, the last 3 times we saw open gaps on the weekly charts, 2009, 2011, and 2013, were all filled within 1 to 7 weeks. The current gap has been open for 4 weeks.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Completion Index (small caps / S-Fund) pulled back from Wednesday's big rally last week, and is now testing for support at the 50-day EMA. This charts looks like it is capable of blasting off, but it will have to move above resistance to do it.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Transportation Index failed at the 200-day EMA last week and seems to be at a critical juncture. Obviously if it can't get above the 200-day EMA, the bear market will resume and if that happens it will eventually drag the rest of the market with it, but if it can move above it, that could be the confirmation the market needs to continue higher into the end of the year.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Like the small caps and Transportation Index, the EFA (EAFE Index / I-fund) is stuck between the 50 and 200-day EMAs, which is kind of a limbo for technical analysts.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Japanese Nikkei, which makes up one of the highest percentages of the I-fund, is interestingly trading within the 200-day EMA (green) and the 200-day simple moving average (red).
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (bonds / F-fund) opened a large gap last week and fell below the 4-month long rising trading channel. The gap will likely get filled this week, but it will have to get above that old support line to get there. The breakdown in September only lasted 2 days, however.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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.
