Stocks rallied early and held onto to some gains into the close as the light volume holiday week starts. The Dow gained 40-points and the small caps led the day. This is typical holiday action, but the action leading up to these pre / post Christmas weeks was not exactly typical.
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The Dow is still about 120 points away from 20,000 which seemed inevitable last week but so far no milestone. I actually would like to see it get hit so we know how investors will react once it's out of the way but as I mentioned yesterday, 10,000 took 11 years to clear for good so I suspect 20,000 could be in for a similar fate.
The SPY (S&P 500 / C-fund) was up 0.2% yesterday and remains in a flag formation. This is generally a bullish formation for stocks as the big rally pauses to consolidate and potentially reload. But some of the other charts don't look quite as bullish and the question is whether the rest of the market will follow the S&P, or if the S&P will follow the other market indices.
The DWCPF (S-fund) is one of those that shows some bearishness with a small bear flag forming off the pullback after the rising support broke down. It has had a heck of a run since the election so a little pause here could be healthy as long as the technical picture holds up.
The EFA (I-fund) shows a classic bear flag at the moment, but it too had a big run higher and may just be in a healthy pullback. To be determined.
The Nasdaq 100 (QQQ), like the S&P, is forming a more bullish flag as it hold above the breakout level for another day while digesting recent gains.
The AGG (bonds / F-fund) rebounded off of Friday's low with a nice gain. It is way overdue for a relief rally but we have been saying that for weeks. We'll believe it when we see it.
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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