Stocks opened slightly higher on Friday but we finally saw a little slowdown in upside momentum and the day ended with modest losses. The Dow gave up 36-points and while it may be time for a little overbought pullback or pause, this holiday shortened week has some strong seasonality heading into Wednesday and Friday's trading.
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So this week could be a battle of extended indices and potential profit taking, versus a positive bias surrounding Thanksgiving Day.
I don't usually take any days off from the website but a few times a year I will back off and make things quick so I can spend more time with the family. This week is one of those times. But as Murphy's Law would have it, I see I hadn't signed on for about 18 hours over the weekend and the site had been down. We are in the process of moving the site to a different server and I see that our webhosting company had some issues pointing the site to the new server which is not up to date and still being tested. I appreciate your patience while we work through these issues.
The SPY (S&P 500 / C-Fund) has been forming a combination of an "F" flag and a rising wedge. Both formations have the potential to continue higher, but they also have the reputation for eventually breaking to the downside.
The DWCPF (S-fund) was up slightly again on Friday, continuing to lead the market higher. Clearly this chart has come a long way in a short amount of time and is extended, and momentum is on its side. It has a similar run in June / July, although this move has been even more impressive, but when the parabolic move was done in July, it still managed to grind slowly higher for some time after. So the question is whether we see similar momentum or if profit taking kicks in at some point.
The EFA (I-fund) continues to struggle and the relentless recent strength in the dollar is part of the problem here. This chart is broke but if there's any positive to look for, it could be that a falling wedge formation tends to break to the upside. The problem is it may have already broken to the downside on Friday.
The Nasdaq 100 has also been lagging in comparison to the S&P and small caps, but it had a good week last week. There may be some trouble for the big techs if this chart can't get above the descending resistance line currently near 117.50.
The High Yield Corporate Bond Fund was flat on Friday and is in an interesting situation while looking bearish but possibly creating a bull flag, so it must hold if and when it fills that open gap.
The VIX has completely reversed from the pre-election spike and it is now hitting the low side where it is testing some rising support just under 13.0.
The AGG (Bonds / F-fund) has been in a major funk recently and I decided to show the monthly chart where each candlestick represents one month of action. The current November bar is testing some long-term rising support so it looks like do or die for bonds.
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
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