Yesterday's commentary started with the word, "incredible". Today "amazing" may be appropriate to describe Wednesday's action. The Dow gained 1086-points, the largest point gain ever for a single day, and 504 out of the 505 stocks that are in the S&P 500 were up - the most since at least 1990. All of that is well and good, and any bottom starts with a rally, but don't forget that yesterday's rally only got back the losses from the prior two days of trading.
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We've entered each day over the last week or two wondering when the low was going to be made. Now the question is whether this rally can be trusted, and can it be added on to? And, even if it does go on for a few more days, or even week, has a low in this bear market been made?
I don't know the exact answer of course, but we should get some clues as the days play out. Trading volume, sentiment, support and resistance lines, etc., will all help to write the road map for the road ahead. With the next three trading days still being considered part of the strong holiday seasonal period, and even a couple of days into the New Year, I would think we could see some more gains, but after that...?
The S&P 500 / C-fund got back two days' worth of losses yesterday. You would think that a 117-point, +4.96% gain would do more than that, but that's how bad it has been lately. The high volume selling last Friday did feel like capitulation, despite more big losses on Christmas Eve. There is some resistance just overhead near yesterday's highs, but I suspect we'll see at least one of the moving averages come into play before this rally is over, although there's more long-term resistance (not shown) near 2525.
The weekly chart shows a reversal that broke below the 200-week EMA on Thursday, and went slightly lower yesterday before rebounding and creating what so far is a nice reversal weekly bar. That could change by the end of the week however, because of the nature of weekly bars.
The DWCPF (small caps / S-fund) also posted a 5% gain with some resistance still in the area that it must conquer to continue this rally.
The price of oil reversed as well, and between stocks and oil, I'm not sure which was the dog and which was the tail yesterday, but one was wagging the other.
The EFA (EAFE Index / I-fund) rallied but the dollar was up and the overseas markets were closed before they saw what U.S. stocks did, so it did not fare quite as well.
The AGG (Bonds / F-fund) was down as investors moved from bonds to stocks. It didn't fill that open gap yet, but I suspect that will be next.
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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[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
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[TD][/TD]
[TD="align: center"]
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We've entered each day over the last week or two wondering when the low was going to be made. Now the question is whether this rally can be trusted, and can it be added on to? And, even if it does go on for a few more days, or even week, has a low in this bear market been made?
I don't know the exact answer of course, but we should get some clues as the days play out. Trading volume, sentiment, support and resistance lines, etc., will all help to write the road map for the road ahead. With the next three trading days still being considered part of the strong holiday seasonal period, and even a couple of days into the New Year, I would think we could see some more gains, but after that...?
The S&P 500 / C-fund got back two days' worth of losses yesterday. You would think that a 117-point, +4.96% gain would do more than that, but that's how bad it has been lately. The high volume selling last Friday did feel like capitulation, despite more big losses on Christmas Eve. There is some resistance just overhead near yesterday's highs, but I suspect we'll see at least one of the moving averages come into play before this rally is over, although there's more long-term resistance (not shown) near 2525.
The weekly chart shows a reversal that broke below the 200-week EMA on Thursday, and went slightly lower yesterday before rebounding and creating what so far is a nice reversal weekly bar. That could change by the end of the week however, because of the nature of weekly bars.
The DWCPF (small caps / S-fund) also posted a 5% gain with some resistance still in the area that it must conquer to continue this rally.
The price of oil reversed as well, and between stocks and oil, I'm not sure which was the dog and which was the tail yesterday, but one was wagging the other.
The EFA (EAFE Index / I-fund) rallied but the dollar was up and the overseas markets were closed before they saw what U.S. stocks did, so it did not fare quite as well.
The AGG (Bonds / F-fund) was down as investors moved from bonds to stocks. It didn't fill that open gap yet, but I suspect that will be next.
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.
