Stocks opened strongly on Monday morning but the bears, who had the downside momentum coming into this week, tried to make a stand and sell the rally. It worked for a few hours but the positive holiday bias seemed to kick in and we saw the indices close near their highs. The Dow gained 123-points.
Traders do not like to lose money on the short side of the market this week. Not that they like to lose money anytime, but betting against stocks as a trader this week is historically a bad move so the bears are likely already starting their holidays. Sure, there could be some profit taking but the outright short sellers won't be out in full force. The late action on Monday looked a lot like a short covering rally so I assume the rest of the week will be light volume trading with a positive, less volatile, bias.
[TABLE="width: 89%, align: center"]
[TR]
[TD="width: 180, align: center"]
[/TD]
[TD="width: 49, align: center"][/TD]
[TD="align: center"] Daily TSP Funds Return
[TABLE="width: 69%, align: center"]
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
We are now in the midst if the historically strongest 2-week period of the year for stocks. Stocks are not up every Christmas season, but on average they have their biggest advantage right now. This chart includes data from 1950-2011.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
Bottom line: This is a good time of the year for stocks but there are no guarantees.
The SPY (S&P 500 / C-Fund) withstood some late morning pressure by the bears, but by early afternoon they seemed to relent and the bulls took charge. The chart still looks tentative in the short-term but notice how light the volume was. That's a good sign that the positive holiday bias is on... as long as there are no surprising news events.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
We'll keep an eye on this potential bullish scenario where we have a basically completed large bull flag and inverted head and shoulders pattern. The recent action has been on the bearish side but if the 2000 area can hold we could see these bullish formations play out the way they typically do, and that could lead to a very good start for 2016. Why stocks would go up, I don't know. But the chart looks promising.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Completion Index (small caps / S-Fund) was up modestly yesterday and may look at the small overhead gap as a potential target for any more upside action.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-Fund) filled its overhead gap yesterday but remains in a short-term downtrend.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
I noticed that a couple of the High Yield Bond Fund charts are showing different results. This Credit Suisse Fund looks a lot more bullish that the iShares HYG fund that I also post there. With stocks up yesterday, I decided to show the more bullish chart, but you can see it did fail at resistance at yesterday's high.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-Fund) still looks rather bearish, and if stocks can hold up during the holidays, that may not improve.
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
Traders do not like to lose money on the short side of the market this week. Not that they like to lose money anytime, but betting against stocks as a trader this week is historically a bad move so the bears are likely already starting their holidays. Sure, there could be some profit taking but the outright short sellers won't be out in full force. The late action on Monday looked a lot like a short covering rally so I assume the rest of the week will be light volume trading with a positive, less volatile, bias.
[TABLE="width: 89%, align: center"]
[TR]
[TD="width: 180, align: center"]
[TD="width: 49, align: center"][/TD]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
We are now in the midst if the historically strongest 2-week period of the year for stocks. Stocks are not up every Christmas season, but on average they have their biggest advantage right now. This chart includes data from 1950-2011.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
Bottom line: This is a good time of the year for stocks but there are no guarantees.
The SPY (S&P 500 / C-Fund) withstood some late morning pressure by the bears, but by early afternoon they seemed to relent and the bulls took charge. The chart still looks tentative in the short-term but notice how light the volume was. That's a good sign that the positive holiday bias is on... as long as there are no surprising news events.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
We'll keep an eye on this potential bullish scenario where we have a basically completed large bull flag and inverted head and shoulders pattern. The recent action has been on the bearish side but if the 2000 area can hold we could see these bullish formations play out the way they typically do, and that could lead to a very good start for 2016. Why stocks would go up, I don't know. But the chart looks promising.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Completion Index (small caps / S-Fund) was up modestly yesterday and may look at the small overhead gap as a potential target for any more upside action.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-Fund) filled its overhead gap yesterday but remains in a short-term downtrend.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
I noticed that a couple of the High Yield Bond Fund charts are showing different results. This Credit Suisse Fund looks a lot more bullish that the iShares HYG fund that I also post there. With stocks up yesterday, I decided to show the more bullish chart, but you can see it did fail at resistance at yesterday's high.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-Fund) still looks rather bearish, and if stocks can hold up during the holidays, that may not improve.
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
