Who was that man in the white beard that kicked off the Santa Claus rally? Why it was Ben Bernanke, of course. Who were you expecting? The surprise tapering announcement triggered a surprising reaction from investors as the Dow gained a whopping 293-points.
[TABLE="align: center"]
[TR]
[TD]
[/TD]
[TD="align: center"] Daily TSP Funds Return
[TABLE="width: 183"]
[TR]
[TD="width: 83, align: right"] G-Fund:
[/TD]
[TD="align: right"] +0.0063%
[/TD]
[/TR]
[TR]
[TD="width: 83, align: right"] F-fund:
[/TD]
[TD="align: right"] -0.15%
[/TD]
[/TR]
[TR]
[TD="width: 83, align: right"] C-fund:
[/TD]
[TD="align: right"] +1.67%
[/TD]
[/TR]
[TR]
[TD="width: 83, align: right"] S-fund:
[/TD]
[TD="align: right"] +1.21%
[/TD]
[/TR]
[TR]
[TD="width: 83, align: right"] I-fund:
[/TD]
[TD="align: right"] +0.96%
[/TD]
[/TR]
[/TABLE]
[TABLE="align: center"]
[TR]
[TD="align: right"]
[/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The initial knee-jerk reaction was down after the announcement, and the S&P 500 (SPY) fell to a new multi-week low before nearly hitting the 50-day EMA and rebounding strongly. This looked very good, so what could go wrong? The only concern might be that it was an emotional reaction and big moves after Fed announcements can be like big rallies following job reports, where often the action is reversed in the coming days. But we're about to head into the strongest week of the year historically, so maybe it's a wash?
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
During the quick downward reaction after the announcement, the S&P 500 hit the 50-day EMA and the old resistance line, which has been acting as support. This is a perfect place for a rebound, so that's positive news, plus the action created a positive outside reversal day. But again, how much of it was emotional trading and possibly a lot of short-covering, that will be reversed in the coming days? Perhaps it will stay in this range between the support line and the 1810 area?
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The small caps broke above some key resistance...
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Today is day -4 on this seasonality chart surrounding Christmas Day. After yesterday's action, we may not see "normal" seasonal action as things may have changed after the tapering announcement and reaction.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
Bonds also saw a wide trading range yesterday but ended the day with modest losses while continuing to hang around the key support lines.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The bond charts look very bearish and only extreme negative sentiment may be holding them up at this point.
In today's TSP Talk Plus Report we look at the stats of prior occurrences when the S&P 500 hit a new high after rallying 1% on the day of an FOMC meeting. We also look at the overbought / oversold indicator, and look at the crazy day the dollar had. 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.html
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]
[TD="align: center"] Daily TSP Funds Return
[TABLE="width: 183"]
[TR]
[TD="width: 83, align: right"] G-Fund:
[/TD]
[TD="align: right"] +0.0063%
[/TD]
[/TR]
[TR]
[TD="width: 83, align: right"] F-fund:
[/TD]
[TD="align: right"] -0.15%
[/TD]
[/TR]
[TR]
[TD="width: 83, align: right"] C-fund:
[/TD]
[TD="align: right"] +1.67%
[/TD]
[/TR]
[TR]
[TD="width: 83, align: right"] S-fund:
[/TD]
[TD="align: right"] +1.21%
[/TD]
[/TR]
[TR]
[TD="width: 83, align: right"] I-fund:
[/TD]
[TD="align: right"] +0.96%
[/TD]
[/TR]
[/TABLE]
[TABLE="align: center"]
[TR]
[TD="align: right"]
[/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The initial knee-jerk reaction was down after the announcement, and the S&P 500 (SPY) fell to a new multi-week low before nearly hitting the 50-day EMA and rebounding strongly. This looked very good, so what could go wrong? The only concern might be that it was an emotional reaction and big moves after Fed announcements can be like big rallies following job reports, where often the action is reversed in the coming days. But we're about to head into the strongest week of the year historically, so maybe it's a wash?
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
During the quick downward reaction after the announcement, the S&P 500 hit the 50-day EMA and the old resistance line, which has been acting as support. This is a perfect place for a rebound, so that's positive news, plus the action created a positive outside reversal day. But again, how much of it was emotional trading and possibly a lot of short-covering, that will be reversed in the coming days? Perhaps it will stay in this range between the support line and the 1810 area?
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The small caps broke above some key resistance...
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Today is day -4 on this seasonality chart surrounding Christmas Day. After yesterday's action, we may not see "normal" seasonal action as things may have changed after the tapering announcement and reaction.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
Bonds also saw a wide trading range yesterday but ended the day with modest losses while continuing to hang around the key support lines.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The bond charts look very bearish and only extreme negative sentiment may be holding them up at this point.
In today's TSP Talk Plus Report we look at the stats of prior occurrences when the S&P 500 hit a new high after rallying 1% on the day of an FOMC meeting. We also look at the overbought / oversold indicator, and look at the crazy day the dollar had. 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.html
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.
