Happy New Year! We saw 2018 wrap up on Monday with a 265-point gain in the Dow, and solid gains in most indies. We start the New Year with plenty of uncertainty as far as interest rates, tariffs, a government shutdown, a political mess that should keep the President busy as the new Democratically controlled House of Representative will be going after him relentlessly, while the Republican controlled Senate does their own investigates so everyone will be busy beating each other up. How this government shutdown will ever get resolved is a mystery to me.
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I'm sure many of you are happy to see 2018 behind us since it was not kind to most investors. All of the the TSP stock funds were down for year, and only the G fund and F-fund (bonds) were up. It took a big rally in the F-fund in December to push it into positive territory for the year, so it wasn't an easy year to make money.
The S&P 500 was down about 9% in the year 2000. That's the last time we saw a single digit loss for a year. The start of the next year was tricky. The 1st trading day in 2001 saw the S&P down 2.80%. Ugly, and a bad start to the new year, a year that would see another 12% decline in the S&P 500. But the tricky part was that the S&P 500 gained 5.01% on the second trading day in January that year.
To put that in perspective, that one day 5% gain was nearly twice as much as the highest returning fund (G) in 2018 for the entire year. I don't know how this year will play out, and over the last two commentaries I showed that there were many different types of starts to a new year. I just know the next couple of days could see big moves. If you know that direction, and play it correctly, you could have a big edge on the market this year.
I posted this end of 2008, start of 2009 chart on Monday, and whether it will have any foresight into what happens to start this year, I don't know, but since 2008 was the last year to end in negative territory, and despite that loss, did have a Santa Claus rally at the end of the year, we'll want to be on guard for a possible repeat.
On the 23rd of December in 2008, the S&P made a closing low, then rallied during the first 3 trading days of 2009, although most of those gains were made on the first trading day. But by trading day #4 in January, the rally ran out of steam and reversed down with some sharp losses that took away all of the gains from the Santa Claus rally. It's possible.
The January Effect says that small caps should outperform the large caps this month. That was something that had crept into December in more recent but obviously not in 2018 with it losing 10.7% in December. So perhaps it's the small caps' turn in January? Also, we're seeing a little bit of weakness in the dollar recently with some upside trends breaking. Does that mean that the I-fund is due to outperform this year? It's 13.4% loss last year was rough for those who played it.
Whatever happens, our indicators tell us we're still in a bear market situation so we should expect bearish outcomes until we start seeing the charts improve technically.
The December Jobs report comes out on Friday morning and estimates are looking for a gain of 180,000 jobs, an unemployment rate of 3.7%, and wages rising 0.3%.
The S&P 500 / C-fund got back some of those late Friday losses on Monday as the Santa Claus rally continued. We saw a break of the December descending trading channel so the relief rally is in progress. There are some roadblocks between about 2550 and 2625 as you see in the longer term charts below. This daily chart shows the 20-day EMA at 2551. The spinning top formation last Friday is still a potential turning point so the bulls will need to see some upside follow-through action early this week to avoid that.
This weekly chart shows the technical breakdown in 2018, but also the meaningful hold at the 200-week moving average below 2400. There is also solid resistance just above 2600.
I'm showing the log-scale weekly chart as well, which is more about percentage gains and losses rather than treating every 100-points equally. On this chart the breakdown occurred much earlier in the year.
The monthly chart shows the S&P 500 breaking down from the 2018 support line but it is still above the 50-month EMA and the long-term rising support lines off the 2009 and 2011 lows.
The Monthly log-scale chart however shows the breakdowns below those rising support lines, and it closed 2018 just below that line coming off the 2009 bear market low.
The DWCPF (small caps / S-fund) has had a nice 4-day bounce and it seems to have escaped above some resistance and now has some overhead room. But this is a bad looking chart and I suspect it will be testing the lows in the coming weeks. So, playing the upside for a bounce is fine, but I'm not sure I'd get too comfortable.
The EFA (EAFE Index / I-fund) is also an improving chart of late, but it is still in poor shape overall. As I mentioned above, the dollar will play a big role in whether this fund will outperform the U.S. stock funds or not this year, and the dollar seems to be running out of steam right now.
The AGG (Bonds / F-fund) is continuing to surprise on the upside after a big December for bonds. But now it is up against the highs from the end of 2017 / beginning of 2018, and double tops can lead to drops.
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.
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[TR]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[TD][/TD]
[TD="align: center"]
[/TR]
[/TABLE]
I'm sure many of you are happy to see 2018 behind us since it was not kind to most investors. All of the the TSP stock funds were down for year, and only the G fund and F-fund (bonds) were up. It took a big rally in the F-fund in December to push it into positive territory for the year, so it wasn't an easy year to make money.
The S&P 500 was down about 9% in the year 2000. That's the last time we saw a single digit loss for a year. The start of the next year was tricky. The 1st trading day in 2001 saw the S&P down 2.80%. Ugly, and a bad start to the new year, a year that would see another 12% decline in the S&P 500. But the tricky part was that the S&P 500 gained 5.01% on the second trading day in January that year.
To put that in perspective, that one day 5% gain was nearly twice as much as the highest returning fund (G) in 2018 for the entire year. I don't know how this year will play out, and over the last two commentaries I showed that there were many different types of starts to a new year. I just know the next couple of days could see big moves. If you know that direction, and play it correctly, you could have a big edge on the market this year.
I posted this end of 2008, start of 2009 chart on Monday, and whether it will have any foresight into what happens to start this year, I don't know, but since 2008 was the last year to end in negative territory, and despite that loss, did have a Santa Claus rally at the end of the year, we'll want to be on guard for a possible repeat.
On the 23rd of December in 2008, the S&P made a closing low, then rallied during the first 3 trading days of 2009, although most of those gains were made on the first trading day. But by trading day #4 in January, the rally ran out of steam and reversed down with some sharp losses that took away all of the gains from the Santa Claus rally. It's possible.
The January Effect says that small caps should outperform the large caps this month. That was something that had crept into December in more recent but obviously not in 2018 with it losing 10.7% in December. So perhaps it's the small caps' turn in January? Also, we're seeing a little bit of weakness in the dollar recently with some upside trends breaking. Does that mean that the I-fund is due to outperform this year? It's 13.4% loss last year was rough for those who played it.
Whatever happens, our indicators tell us we're still in a bear market situation so we should expect bearish outcomes until we start seeing the charts improve technically.
The December Jobs report comes out on Friday morning and estimates are looking for a gain of 180,000 jobs, an unemployment rate of 3.7%, and wages rising 0.3%.
The S&P 500 / C-fund got back some of those late Friday losses on Monday as the Santa Claus rally continued. We saw a break of the December descending trading channel so the relief rally is in progress. There are some roadblocks between about 2550 and 2625 as you see in the longer term charts below. This daily chart shows the 20-day EMA at 2551. The spinning top formation last Friday is still a potential turning point so the bulls will need to see some upside follow-through action early this week to avoid that.
This weekly chart shows the technical breakdown in 2018, but also the meaningful hold at the 200-week moving average below 2400. There is also solid resistance just above 2600.
I'm showing the log-scale weekly chart as well, which is more about percentage gains and losses rather than treating every 100-points equally. On this chart the breakdown occurred much earlier in the year.
The monthly chart shows the S&P 500 breaking down from the 2018 support line but it is still above the 50-month EMA and the long-term rising support lines off the 2009 and 2011 lows.
The Monthly log-scale chart however shows the breakdowns below those rising support lines, and it closed 2018 just below that line coming off the 2009 bear market low.
The DWCPF (small caps / S-fund) has had a nice 4-day bounce and it seems to have escaped above some resistance and now has some overhead room. But this is a bad looking chart and I suspect it will be testing the lows in the coming weeks. So, playing the upside for a bounce is fine, but I'm not sure I'd get too comfortable.
The EFA (EAFE Index / I-fund) is also an improving chart of late, but it is still in poor shape overall. As I mentioned above, the dollar will play a big role in whether this fund will outperform the U.S. stock funds or not this year, and the dollar seems to be running out of steam right now.
The AGG (Bonds / F-fund) is continuing to surprise on the upside after a big December for bonds. But now it is up against the highs from the end of 2017 / beginning of 2018, and double tops can lead to drops.
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.
