1/02/12
Happy New Year, everybody! I hope everyone had a nice holiday season. Normally a quiet couple of weeks with a positive bias, last week and this past Monday was anything but that with the fiscal cliff discussions ongoing, and the capital gains effect playing out.
We ended the year seeing a big rally in the indices on Monday after talks of a potential FC deal in the works, and as I write this on Tuesday night, the House of Representatives are about to vote on the bill they've been sent. I won't give my opinion on the deal, but let's say it seems to be enough, assuming it passes the House, to ease the market's worst fears.
The Dow gained 166-points on Monday and the S&P 500 gained all of the points it lost during the three weak trading days after Christmas.
[TABLE="width: 88%, align: center"]
[TR]
[TD]
[/TD]
[TD="align: center"]Daily TSP Funds Return[TABLE="width: 152"]
[TR]
[TD]G-Fund:[/TD]
[TD="align: right"]0.0107%[/TD]
[/TR]
[TR]
[TD]F-fund:[/TD]
[TD="align: right"]-0.10%[/TD]
[/TR]
[TR]
[TD]C-fund:[/TD]
[TD="align: right"]1.70%[/TD]
[/TR]
[TR]
[TD]S-fund:[/TD]
[TD="align: right"]1.86%[/TD]
[/TR]
[TR]
[TD]I-fund:[/TD]
[TD="align: right"]0.66%[/TD]
[/TR]
[/TABLE]
[TABLE="width: 80%, align: center"]
[TR]
[TD="align: right"]More returns[/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
Here are the final returns for the month of December, and the final 2012 returns.
Not a bad year at all considering what we went through, but I have to admit that it was not an easy year to trade for me. The trends were choppy with deep losses and sharp rallies that made it difficult to time. Trader Fred, one of the most consistent premium services over the years, continually got stopped out of trades, only to see the market reverse back up right afterward. I had a few similar bad trades. Here are the final 2012 returns for the Premium Services...
The Sentiment Survey System ended the year with an impressive +20.62%. Even though I developed it, I don't follow this system verbatim but rather use this system as one of my indicators. In retrospect it would have been better for me to have followed it signal for signal last year, but it does not have any safety net when things are going wrong and it scares me sometimes.
To the charts:
The S&P 500 rebounded sharply on Monday - right where the bulls wanted it to as the rising parallel trading channel could not withstand any more downside. Monday was also a positive outside day as the low was lower than the prior day's low, and the high was higher than the prior day's high. This is a good indication of an imminent market reversal.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
We'll continue to monitor the action against this past spring / summer chart as the current chart seems to still be following it rather closely. I don't like to look at it on a day to day comparison, but if it continues, the upside action could continue for a couple more days before we get another pullback.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Here's the money shot - or whatever they call the picture that tells the story. This 1986 /1987 chart could give us an idea how markets play out at the end of a year, and the beginning of the next, when capital gains rates are going to increase the following year.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
We saw a little of the end of the year selling in December, that they saw in 1986, the last time capital gains were increasing going into the new year. Once the capital gains selling ended, January was an explosive month in '87 and that would obviously be a great scenario for the bulls in January 2013. Now it turns out, if the House passes the fiscal cliff bill, that the capital gains rates will only go up for those making over $400K ($450K for married couples.)
Historically small caps stocks have outperformed in January and that has crept into December in more recent years. Monday's 2.1% may be the start. Google "January Effect" to read more about that.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
You can see that historically, the market does well the few days after New Years Day, but then tends to see some profit taking.
Chart provided courtesy of www.sentimentrader.com
This year there aren't the big December gains to take profits on so we may see a lot of profit taking - unless we get some big gains in the next couple of days, which is possible. And don't forget, when a lot of investors are on the sidelines - concerned about the fiscal cliff or from capital gains selling - they tend to miss the boat when the market rallies quickly. Then they buy every minor dip making it less likely to get a pullback.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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.
Happy New Year, everybody! I hope everyone had a nice holiday season. Normally a quiet couple of weeks with a positive bias, last week and this past Monday was anything but that with the fiscal cliff discussions ongoing, and the capital gains effect playing out.
We ended the year seeing a big rally in the indices on Monday after talks of a potential FC deal in the works, and as I write this on Tuesday night, the House of Representatives are about to vote on the bill they've been sent. I won't give my opinion on the deal, but let's say it seems to be enough, assuming it passes the House, to ease the market's worst fears.
The Dow gained 166-points on Monday and the S&P 500 gained all of the points it lost during the three weak trading days after Christmas.
[TABLE="width: 88%, align: center"]
[TR]
[TD]
[TD="align: center"]Daily TSP Funds Return[TABLE="width: 152"]
[TR]
[TD]G-Fund:[/TD]
[TD="align: right"]0.0107%[/TD]
[/TR]
[TR]
[TD]F-fund:[/TD]
[TD="align: right"]-0.10%[/TD]
[/TR]
[TR]
[TD]C-fund:[/TD]
[TD="align: right"]1.70%[/TD]
[/TR]
[TR]
[TD]S-fund:[/TD]
[TD="align: right"]1.86%[/TD]
[/TR]
[TR]
[TD]I-fund:[/TD]
[TD="align: right"]0.66%[/TD]
[/TR]
[/TABLE]
[TABLE="width: 80%, align: center"]
[TR]
[TD="align: right"]More returns[/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
Here are the final returns for the month of December, and the final 2012 returns.
Not a bad year at all considering what we went through, but I have to admit that it was not an easy year to trade for me. The trends were choppy with deep losses and sharp rallies that made it difficult to time. Trader Fred, one of the most consistent premium services over the years, continually got stopped out of trades, only to see the market reverse back up right afterward. I had a few similar bad trades. Here are the final 2012 returns for the Premium Services...
The Sentiment Survey System ended the year with an impressive +20.62%. Even though I developed it, I don't follow this system verbatim but rather use this system as one of my indicators. In retrospect it would have been better for me to have followed it signal for signal last year, but it does not have any safety net when things are going wrong and it scares me sometimes.
To the charts:
The S&P 500 rebounded sharply on Monday - right where the bulls wanted it to as the rising parallel trading channel could not withstand any more downside. Monday was also a positive outside day as the low was lower than the prior day's low, and the high was higher than the prior day's high. This is a good indication of an imminent market reversal.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
We'll continue to monitor the action against this past spring / summer chart as the current chart seems to still be following it rather closely. I don't like to look at it on a day to day comparison, but if it continues, the upside action could continue for a couple more days before we get another pullback.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Here's the money shot - or whatever they call the picture that tells the story. This 1986 /1987 chart could give us an idea how markets play out at the end of a year, and the beginning of the next, when capital gains rates are going to increase the following year.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
We saw a little of the end of the year selling in December, that they saw in 1986, the last time capital gains were increasing going into the new year. Once the capital gains selling ended, January was an explosive month in '87 and that would obviously be a great scenario for the bulls in January 2013. Now it turns out, if the House passes the fiscal cliff bill, that the capital gains rates will only go up for those making over $400K ($450K for married couples.)
Historically small caps stocks have outperformed in January and that has crept into December in more recent years. Monday's 2.1% may be the start. Google "January Effect" to read more about that.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
You can see that historically, the market does well the few days after New Years Day, but then tends to see some profit taking.
Chart provided courtesy of www.sentimentrader.com
This year there aren't the big December gains to take profits on so we may see a lot of profit taking - unless we get some big gains in the next couple of days, which is possible. And don't forget, when a lot of investors are on the sidelines - concerned about the fiscal cliff or from capital gains selling - they tend to miss the boat when the market rallies quickly. Then they buy every minor dip making it less likely to get a pullback.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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.
