It looked as if we were going to get some turnaround Tuesday action yesterday as the stocks that had been hit hard and lagging lately like big Tech and energy, started to catch a bid while the leaders of this rally like the Dow, small caps, and the Transports were down early. But by midday the entire market got on board and stocks closed strongly. The Dow gained 54-points, or 0.29%, while the Nasdaq gained over 1%.
[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]
The post election rally has been quite impressive and now we head into the more positive seasonal period of the year for stocks. This chart is a bit dated but it includes 52 years of data. There does seem to be some weakness after Thanksgiving weekend and that can roll into early December historically before the Santa Claus rally kicks in later in the month.
The SPY (S&P 500 / C-Fund) is back testing all time highs and looks like it is about to test the top of the flag formation - the one that is very similar to the post Brexit flag that blasted to the upside. Is that what we'll see here or is that getting too obvious? Both of the large gaps at the bottom of those flagpoles remain open.
The DWCPF (S-fund) opened lower yesterday but once again made a new high. The 20-day EMA is crossing back above the 50-day EMA, and while that is a bullish technical sign, it can also be an indication of being short-term overbought. Getting at least that first gap filled would help the chart technically. Parabolic moves tend to come down as fast as they go up so the bulls should prefer a stutter step rally.
The Nasdaq 100 (QQQ) bounced back from a disappointing post-election move gaining 1.4% yesterday as the big techs like Amazon, Apple, Facebook, and Google all rebounded. It did stall at the 50-day EMA so the rebound is being tested already.
The EFA (I-fund) had a good day finally, although it remains below some prominent resistance and below the 200-day EMA. Those are both bearish signs but if this can push above 57.25 or so, perhaps it will be ready to make a move to the upside. The 50-day EMA is at 57.85.
The price of oil had a big day gaining nearly 6% yesterday and closed just north of the 200-day EMA, but it remains below the descending trend line and the 50-day EMA. This is probably where we find out if this is just a temporary bounce in a downtrend, or a bottom. $43 has been fairly solid support over the last few months.
The AGG (Bonds / F-fund) had a small bounce yesterday and investors are not quite ready to jump on bonds while stocks are soaring. This looks ripe for some bond bargain hunters but first we may need to see the rally in stocks slow down a little.
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.
