The market was quite flat on Friday to end to end a negative week for stocks. The Dow gained 18-points and the S&P 500 was flat. Small caps outperformed for the first time in a while, and the hot I-fund took a breather, falling as the dollar rallied for a second straight day. Bonds (F-fund) were up for the day and for the week.
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I'm posting this over the weekend because I will be on the road most of Sunday.
The final week in September was red for all of the TSP stock funds but the month ended mixed with only the S-fund closing with a negative monthly return. Bonds were also down for the month as we saw the 10-year Treasury yield pop back above 3% in September.
The action to end the month, which also ended the third quarter, was a little quiet and it wouldn't surprise me if Monday morning gaps open in one direction or the other to start the new quarter. The seasonality chart for October might suggest an upside open to the month after the second half of September's very negative seasonal bias. October's average monthly return is not bad at all, especially when compared to August and September's, but it is the most volatile month according to this article, even when you take out the infamous bear markets of 1987 and 2008.
With interest rates rising, trade war tensions, and political turmoil, it's hard to count on anything, but I guess that's how and why the term "climb the wall of worry" came to be used. This market has remained resistant in the face of all of these obstacles despite some attempts by the bears to put some pressure on in the latter half of September. Many of the charts are just above some key support areas to start the month, so the direction in the first week could tell us a lot.
The S&P 500 / C-fund has been drifting lower since the high it made on Friday, September 21. As we saw in August, and then again in early September, we've had a push down to the lower end of the rising trading channel that held three times last week. The weak closes that we saw over the last three days where the index closed well of the highs, is similar to the action from the end of the 2nd quarter in late June. That kind of negative action didn't hurt the S&P as stocks started to rally in early July, so perhaps we're seeing something similar here. It could be some end of the quarter window dressing activity, but I suppose we will know soon enough when the start of the fourth quarter begins this week.
The small caps (S-fund) were up modestly on Friday. They lost some steam into the close but they did have a nice reversal off of some early weakness. It managed to close back above the 50-day EMA after a couple of closes just below it. The rising support line of the trading channel held again, and that's where we'll start the new month - just above it.
The Nasdaq chart looks a little different than the other charts above. It peaked in late August, fell hard in early September, but bottomed in that first week and it has been drifting higher since, but that may be creating a bearish flag looking formation. You can see a small pattern there of hitting the top of the flag before a pulling back to the bottom, followed by another couple of days near the top of the flag and a pullback, etc.
The EAFE Index was at the mercy of a volatile dollar last month. It temporarily broke above the 200-day EMA but ended the month back below it. The old resistance line at the top of the channel, and the 50-day EMA may try to act as support on any further pullback.
The dollar will have a say in that. The bearish looking head and shoulder pattern appeared to break down in mid-September - depending where you draw your neckline, but it has bounced back strongly over the last few trading days. If this is an H&S pattern, it may be doing one of those head tests now.
The I-fund out-performed in September after being the laggard of the TSP stock funds for most of the year. Last month it came back to life to lead the TSP stock funds for the month. The answer to whether the I-fund is ready to come out of its underperforming ways may be in the chart of the German DAX. The DAX pulled back 1.5% on Friday after another attempt at the 200-day EMA again failed. That 12,500 area looks to be the very least that it needs to break above to make a dent in its long downtrend, and even there it would have to get above 12,600 - 12.700 to create a new uptrend. So pulling back from resistance like it did on Friday is not a good sign, and the I-fund can not usually withstand weakness in Germany.
The AGG (bonds) rallied early but reversed once it hit the 50 and 200-day EMAs. It had a nice bounce off the recent lows, but in this bearish bond market, it may be a bit of a struggle getting back above those key EMAs.
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.
[TABLE="align: center"]
[TR]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[TD]
[/TD]
[TD="align: center"]
[/TR]
[/TABLE]
I'm posting this over the weekend because I will be on the road most of Sunday.
The final week in September was red for all of the TSP stock funds but the month ended mixed with only the S-fund closing with a negative monthly return. Bonds were also down for the month as we saw the 10-year Treasury yield pop back above 3% in September.
The action to end the month, which also ended the third quarter, was a little quiet and it wouldn't surprise me if Monday morning gaps open in one direction or the other to start the new quarter. The seasonality chart for October might suggest an upside open to the month after the second half of September's very negative seasonal bias. October's average monthly return is not bad at all, especially when compared to August and September's, but it is the most volatile month according to this article, even when you take out the infamous bear markets of 1987 and 2008.
With interest rates rising, trade war tensions, and political turmoil, it's hard to count on anything, but I guess that's how and why the term "climb the wall of worry" came to be used. This market has remained resistant in the face of all of these obstacles despite some attempts by the bears to put some pressure on in the latter half of September. Many of the charts are just above some key support areas to start the month, so the direction in the first week could tell us a lot.
The S&P 500 / C-fund has been drifting lower since the high it made on Friday, September 21. As we saw in August, and then again in early September, we've had a push down to the lower end of the rising trading channel that held three times last week. The weak closes that we saw over the last three days where the index closed well of the highs, is similar to the action from the end of the 2nd quarter in late June. That kind of negative action didn't hurt the S&P as stocks started to rally in early July, so perhaps we're seeing something similar here. It could be some end of the quarter window dressing activity, but I suppose we will know soon enough when the start of the fourth quarter begins this week.
The small caps (S-fund) were up modestly on Friday. They lost some steam into the close but they did have a nice reversal off of some early weakness. It managed to close back above the 50-day EMA after a couple of closes just below it. The rising support line of the trading channel held again, and that's where we'll start the new month - just above it.
The Nasdaq chart looks a little different than the other charts above. It peaked in late August, fell hard in early September, but bottomed in that first week and it has been drifting higher since, but that may be creating a bearish flag looking formation. You can see a small pattern there of hitting the top of the flag before a pulling back to the bottom, followed by another couple of days near the top of the flag and a pullback, etc.
The EAFE Index was at the mercy of a volatile dollar last month. It temporarily broke above the 200-day EMA but ended the month back below it. The old resistance line at the top of the channel, and the 50-day EMA may try to act as support on any further pullback.
The dollar will have a say in that. The bearish looking head and shoulder pattern appeared to break down in mid-September - depending where you draw your neckline, but it has bounced back strongly over the last few trading days. If this is an H&S pattern, it may be doing one of those head tests now.
The I-fund out-performed in September after being the laggard of the TSP stock funds for most of the year. Last month it came back to life to lead the TSP stock funds for the month. The answer to whether the I-fund is ready to come out of its underperforming ways may be in the chart of the German DAX. The DAX pulled back 1.5% on Friday after another attempt at the 200-day EMA again failed. That 12,500 area looks to be the very least that it needs to break above to make a dent in its long downtrend, and even there it would have to get above 12,600 - 12.700 to create a new uptrend. So pulling back from resistance like it did on Friday is not a good sign, and the I-fund can not usually withstand weakness in Germany.
The AGG (bonds) rallied early but reversed once it hit the 50 and 200-day EMAs. It had a nice bounce off the recent lows, but in this bearish bond market, it may be a bit of a struggle getting back above those key EMAs.
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.
