Stocks rallied sharply on Tuesday resuming last week's rally and the positive seasonality trend seems to be alive and well. The Dow gained 293-points on the day and we saw gains near 1% across many indices. Of course volume was light because of the time of year so it's not easy to trust. Adding 1% to a weak year may be just what money managers wanted to bulk up their portfolios, but can they fend off profit takers during the final two trading days of the year?
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Oil was up big yesterday so it was a nice catalyst for the stock market, although as you will see down below, after the oil market closed yesterday the oil futures dropped quite a bit so stocks may not have that catalyst today.
Today is trading day #21 in December, but since this year December has 22 trading days, we were looking at this chart from the last day backwards figuring the two days remaining may be more in tuned with trading days #20 and 21 on the chart. That would have made yesterday more like day #19 and that 65% looked about right. at 52% and 55%, the next two days are more in lined with a random day.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
The SPY (S&P 500 / C-Fund) gapped up on Tuesday and also broke above the descending resistance line. These pennant formation breakouts can produce fake-outs that get reversed, and during a holiday week it seems like a good possibility so lets give it the 3 to 5 day rule before confirming this breakout.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Completion Index (small caps / S-Fund) rallied up to the 50-day EMA and the top of a bear flag. There's a lot to be worried about here.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Transportation Index looks to have created another bear flag (blue) after breaking down from the first one (red).
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-fund) rallied 1% (the I-fund gained +0.80% with the dollar gaining 0.28%). It also broke above the 50-day EMA and produced a 2nd open gap. The overhead resistance is near 60.20. There's a lot going on here including a possible bear flag but also a rising wedge - both are bearish.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The price of oil rallied nearly 2% yesterday helping stocks rally as well. The chart still doesn't look too healthy with that bear flag and the 20-day EMA holding as resistance.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
After the close yesterday, the oil futures started to head down about 4:30 PM ET (3:30 CT) and if that holds, that may take away the edge that the stock market had going for it on Tuesday.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
The AGG (Bonds / F-Fund) broke below the short-term support line but closed just above it. It looks susceptible here but it all depends on what happens to stocks.
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.
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Oil was up big yesterday so it was a nice catalyst for the stock market, although as you will see down below, after the oil market closed yesterday the oil futures dropped quite a bit so stocks may not have that catalyst today.
Today is trading day #21 in December, but since this year December has 22 trading days, we were looking at this chart from the last day backwards figuring the two days remaining may be more in tuned with trading days #20 and 21 on the chart. That would have made yesterday more like day #19 and that 65% looked about right. at 52% and 55%, the next two days are more in lined with a random day.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
The SPY (S&P 500 / C-Fund) gapped up on Tuesday and also broke above the descending resistance line. These pennant formation breakouts can produce fake-outs that get reversed, and during a holiday week it seems like a good possibility so lets give it the 3 to 5 day rule before confirming this breakout.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Completion Index (small caps / S-Fund) rallied up to the 50-day EMA and the top of a bear flag. There's a lot to be worried about here.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Transportation Index looks to have created another bear flag (blue) after breaking down from the first one (red).
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-fund) rallied 1% (the I-fund gained +0.80% with the dollar gaining 0.28%). It also broke above the 50-day EMA and produced a 2nd open gap. The overhead resistance is near 60.20. There's a lot going on here including a possible bear flag but also a rising wedge - both are bearish.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The price of oil rallied nearly 2% yesterday helping stocks rally as well. The chart still doesn't look too healthy with that bear flag and the 20-day EMA holding as resistance.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
After the close yesterday, the oil futures started to head down about 4:30 PM ET (3:30 CT) and if that holds, that may take away the edge that the stock market had going for it on Tuesday.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
The AGG (Bonds / F-Fund) broke below the short-term support line but closed just above it. It looks susceptible here but it all depends on what happens to stocks.
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.
