Stocks sold off for a second straight day on Friday, ending a wild week on Wall Street that concluded with its 6th consecutive tripe digit move in the Dow, a loss of 367-points. Fortunately for the bulls, the total loss for the weak was "just" 137-points since three of last week's triple digit moves were positive.
It seems surprising, but for the week the C, S, and I TSP stocks fund were down 0.31%, down 0.34%, and up 0.81% respectively. Yes, the I-fund gained nearly 1%. Just seeing those numbers and might seem like it was yawner week, but obviously it wasn't.
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The problem with this week is, stocks rarely bottom on a Friday so we could see some selling at least early in the week. The good news is, we are beginning the historically strongest 2-week period of the year for stocks. They are not up every Christmas season, but on average they have their biggest advantage right now. This chart includes data from from 1950-2011.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
Can a seasonal advantage stop a two-day avalanche of selling? Can the market rally in the last two weeks and take the S&P 500 and the TSP stock funds from their current losses in 2015, back into positive territory?
Last year December started with a similar struggle, but the strong second half seasonality helped push it to monthly gains, although there was a sell-off on the last trading day of the year last year that took the C-fund to a small loss of 0.24% for the month. The S-fund actually had a 1% gain in December last year as small caps have a tendency to outperform in December and January.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Bottom line: This is a good time of the year for stocks but there are no guarantees.
The SPY (S&P 500 / C-Fund) has a lot going on right now, if you pullback and look at the big picture. The recent action looks similar to what we saw before the August correction. The difference this time is the pole in the bull flag. There was a flag formation in August, but there was no flag pole like we see now. TSP Talk Plus subscribers will see a larger breakdown of this in a chart below.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Also, we could be seeing a large inverted head and shoulders pattern forming (blue circles.) A huge bull flag and inverted head and shoulders pattern would be wildly bullish for stocks in 2016. Too bad the recent action has been anything but.
The weekly chart of the S&P 500 fell back below the 50-week moving average. We could point out a big bull flag here as well, but formations aren't as reliable on the longer-term weekly and monthly charts, although support and resistance is.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The blue line shows a potential problem for stocks that could be a major issue for the market in 2016, so the battle going forward is between the bullish formations, and the possible rounded top.
The Dow Completion Index (small caps / S-Fund) broke above a possible rising wedge last week, but the 20-day EMA held as resistance during the relief rally. The chart looks awful so the small caps, which normally outperform this time of year, will need some help from the positive seasonality.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Transportation Index made a new low on Friday which sets up a whole new set of problems for the stock market since the Transports are generally considered the leader.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
And why Transportation stocks are falling when the price of fuel is plummeting is a bit alarming. This cost cutting benefit should help the bottom line for many of these companies so the question is, is the price of oil falling because supply is rising, or is it falling because demand is down, which would make more sense why the economically sensitive Transports are in such trouble.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-Fund) was down 1% on Friday but it was actually up nearly 1% for the week so it led the way. The small open gap near 59 would be a minimum target for any Santa Claus rally this week.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-Fund) was up on the sell-off in stocks, but this chart still has bearish issues. It seems to be having a problem holding above the 50-day EMA.
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.
It seems surprising, but for the week the C, S, and I TSP stocks fund were down 0.31%, down 0.34%, and up 0.81% respectively. Yes, the I-fund gained nearly 1%. Just seeing those numbers and might seem like it was yawner week, but obviously it wasn't.
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[TR]
[TD="width: 180, align: center"]
[TD="width: 49, align: center"][/TD]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The problem with this week is, stocks rarely bottom on a Friday so we could see some selling at least early in the week. The good news is, we are beginning the historically strongest 2-week period of the year for stocks. They are not up every Christmas season, but on average they have their biggest advantage right now. This chart includes data from from 1950-2011.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
Can a seasonal advantage stop a two-day avalanche of selling? Can the market rally in the last two weeks and take the S&P 500 and the TSP stock funds from their current losses in 2015, back into positive territory?
Last year December started with a similar struggle, but the strong second half seasonality helped push it to monthly gains, although there was a sell-off on the last trading day of the year last year that took the C-fund to a small loss of 0.24% for the month. The S-fund actually had a 1% gain in December last year as small caps have a tendency to outperform in December and January.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Bottom line: This is a good time of the year for stocks but there are no guarantees.
The SPY (S&P 500 / C-Fund) has a lot going on right now, if you pullback and look at the big picture. The recent action looks similar to what we saw before the August correction. The difference this time is the pole in the bull flag. There was a flag formation in August, but there was no flag pole like we see now. TSP Talk Plus subscribers will see a larger breakdown of this in a chart below.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Also, we could be seeing a large inverted head and shoulders pattern forming (blue circles.) A huge bull flag and inverted head and shoulders pattern would be wildly bullish for stocks in 2016. Too bad the recent action has been anything but.
The weekly chart of the S&P 500 fell back below the 50-week moving average. We could point out a big bull flag here as well, but formations aren't as reliable on the longer-term weekly and monthly charts, although support and resistance is.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The blue line shows a potential problem for stocks that could be a major issue for the market in 2016, so the battle going forward is between the bullish formations, and the possible rounded top.
The Dow Completion Index (small caps / S-Fund) broke above a possible rising wedge last week, but the 20-day EMA held as resistance during the relief rally. The chart looks awful so the small caps, which normally outperform this time of year, will need some help from the positive seasonality.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Transportation Index made a new low on Friday which sets up a whole new set of problems for the stock market since the Transports are generally considered the leader.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
And why Transportation stocks are falling when the price of fuel is plummeting is a bit alarming. This cost cutting benefit should help the bottom line for many of these companies so the question is, is the price of oil falling because supply is rising, or is it falling because demand is down, which would make more sense why the economically sensitive Transports are in such trouble.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-Fund) was down 1% on Friday but it was actually up nearly 1% for the week so it led the way. The small open gap near 59 would be a minimum target for any Santa Claus rally this week.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-Fund) was up on the sell-off in stocks, but this chart still has bearish issues. It seems to be having a problem holding above the 50-day EMA.
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.
