The Dow was up almost 100-points yesterday but it was more of a profit taking / tax selling day as most the broader indices had a day of distribution. The S&P 500 managed to close near the flat line but small caps and the Nasdaq saw sharper losses. Bonds were flat, the dollar was up. It's been quite a run but we know stocks don't go up everyday, even during this Santa Claus Rally week.
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I posted the S&P 500 / C-fund above so let's go right to the DWCPF (S-fund) which was down sharply and lagged the other funds. The resistance was there for all to see, so to get a stall here is not a surprise. The orange moving average has been stubborn support for most of the year with just one breakdown, and now that it is below it, it is acting as resistance. Taking a pause here after the big rally is not a big deal yet, but reversing down would be. There is an open gap down near the lows -- just say'in.
The EFA (I-fund) rallied early but stalled after hitting the top of a parallel trading channel, which could be interpreted as a bear flag, but given the time of year, it could still try to rise along the bottom of that resistance line, similar to an F-flag. Or it could pullback and consider a move to the bottom of the flag, so there's a lot of possibilities here.
BND (Bonds / F-fund) was flat and remains in a tight range and coiling near the 50 and 200 day moving averages. A big move to start the New Year could be coming, but which way?
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
To get weekly or daily notifications when we post new commentary, sign up HERE.
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.
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The December seasonality chart, which looks at the prior 30 years of action, does say that the 28th, despite being positive 56% of the time, has a negative average return. The next two days have positive average returns over a 30 year period, but they are actually down slightly more often than up, and the 31st has a slightly bearish record.
Chart provided courtesy of www.sentimentrader.com
Of course a lot of that may have to do with whether the year leading up to these days was strong or weak, which could push the market closer toward profit taking or tax selling, or if there are some bargains to be had. I don't think there is any exact science to it, but maybe some art or pattern recognition.
This is not a prediction, but one year that stands out as having a similar look to this current situation may be December of 1999. Someone in our forum pointed this out (exnavyew) the other day and it got my attention. It was an article on Yahoo.com that said...
"Last week, when the S&P 500 closed at a 52-week high, 334 companies trading on the New York Stock Exchange hit a 52-week low, more than double the amount that marked new one-year highs. That’s happened only three other times in history -- all of them in December 1999, according to Ramsey, who is chief investment officer for Leuthold Group." Source: https://finance.yahoo.com/
So, I looked at this year's chart of the S&P 500, and compared it to 1999's chart to see if there were similarities, and there were, so what happened next in 1999 - 2000?
There was a rally in the early part of the month of December 1999, followed by a mid-month swoon that took away most of those early gains, then a rally into the end of the year. I noticed a PMO indicator crossover on about the 23rd as it headed into the end of the month.
As you can see above, the January that followed began with a thud with all of December's gains gone intraday on the 3rd trading day of January 2000, before a strong bounce pushed it back up to the December high. Then it fell apart again, and of course 2000 was a major peak for the market in March of that year.
Here's the current chart showing a rally to start December (check), a mid-month swoon that took away most of the early gains (check), then a rally into the end of the year (check). The PMO indicator crossed over its moving average around the 23rd (check.)
We still have three days of trading left in the year, and as I mentioned yesterday, some "F" flag action wouldn't be a surprise from here. There was some of that to end December in 1999 as well. But "F" flags do tend to eventually break down, as it did in January 2000
Perhaps it is just a coincidence that the 31st was also on a Friday in 1999 (and not a holiday), the same as it is this year, with the New Year starting on Saturday.
Again, this is not a prediction, but certainly a possibility.
The stock market is open this coming Friday. It still has not been posted on tsp.gov whether they are processing transaction that day so I may be wrong about this. I assumed the TSP would be closed for the holiday on the 31st, but no word on that yet, so perhaps it is open? It would be nice to know. If it's closed then we have to decide by Thursday morning, where we want to have our money to start the New Year, and the first few of days of a New year tend to be pretty wild.
I will be traveling most of Wednesday so Thursday's report may be a quickie.
Admin Note: The AutoTracker will rollover to the New Year this weekend. If you haven't logged in in a while, this would be a good time to do so to avoid having your account go into inactive mode. Also, if you are not on the AutoTracker, this is a good time to start so that we track your full year in 2022. I did find a bug that may have been preventing new users from creating an account, but that has been fixed. Really sorry if that effected you.
More: [url]https://www.tsptalk.com/mb/rules-tos-and-info-please-read/9658-autotracker-rules-how-get-started.html#post320464
[/URL]
Chart provided courtesy of www.sentimentrader.com
Of course a lot of that may have to do with whether the year leading up to these days was strong or weak, which could push the market closer toward profit taking or tax selling, or if there are some bargains to be had. I don't think there is any exact science to it, but maybe some art or pattern recognition.
This is not a prediction, but one year that stands out as having a similar look to this current situation may be December of 1999. Someone in our forum pointed this out (exnavyew) the other day and it got my attention. It was an article on Yahoo.com that said...
"Last week, when the S&P 500 closed at a 52-week high, 334 companies trading on the New York Stock Exchange hit a 52-week low, more than double the amount that marked new one-year highs. That’s happened only three other times in history -- all of them in December 1999, according to Ramsey, who is chief investment officer for Leuthold Group." Source: https://finance.yahoo.com/
So, I looked at this year's chart of the S&P 500, and compared it to 1999's chart to see if there were similarities, and there were, so what happened next in 1999 - 2000?
There was a rally in the early part of the month of December 1999, followed by a mid-month swoon that took away most of those early gains, then a rally into the end of the year. I noticed a PMO indicator crossover on about the 23rd as it headed into the end of the month.
As you can see above, the January that followed began with a thud with all of December's gains gone intraday on the 3rd trading day of January 2000, before a strong bounce pushed it back up to the December high. Then it fell apart again, and of course 2000 was a major peak for the market in March of that year.
Here's the current chart showing a rally to start December (check), a mid-month swoon that took away most of the early gains (check), then a rally into the end of the year (check). The PMO indicator crossed over its moving average around the 23rd (check.)
We still have three days of trading left in the year, and as I mentioned yesterday, some "F" flag action wouldn't be a surprise from here. There was some of that to end December in 1999 as well. But "F" flags do tend to eventually break down, as it did in January 2000
Perhaps it is just a coincidence that the 31st was also on a Friday in 1999 (and not a holiday), the same as it is this year, with the New Year starting on Saturday.
Again, this is not a prediction, but certainly a possibility.
The stock market is open this coming Friday. It still has not been posted on tsp.gov whether they are processing transaction that day so I may be wrong about this. I assumed the TSP would be closed for the holiday on the 31st, but no word on that yet, so perhaps it is open? It would be nice to know. If it's closed then we have to decide by Thursday morning, where we want to have our money to start the New Year, and the first few of days of a New year tend to be pretty wild.
I will be traveling most of Wednesday so Thursday's report may be a quickie.
Admin Note: The AutoTracker will rollover to the New Year this weekend. If you haven't logged in in a while, this would be a good time to do so to avoid having your account go into inactive mode. Also, if you are not on the AutoTracker, this is a good time to start so that we track your full year in 2022. I did find a bug that may have been preventing new users from creating an account, but that has been fixed. Really sorry if that effected you.
More: [url]https://www.tsptalk.com/mb/rules-tos-and-info-please-read/9658-autotracker-rules-how-get-started.html#post320464
[/URL]
I posted the S&P 500 / C-fund above so let's go right to the DWCPF (S-fund) which was down sharply and lagged the other funds. The resistance was there for all to see, so to get a stall here is not a surprise. The orange moving average has been stubborn support for most of the year with just one breakdown, and now that it is below it, it is acting as resistance. Taking a pause here after the big rally is not a big deal yet, but reversing down would be. There is an open gap down near the lows -- just say'in.
The EFA (I-fund) rallied early but stalled after hitting the top of a parallel trading channel, which could be interpreted as a bear flag, but given the time of year, it could still try to rise along the bottom of that resistance line, similar to an F-flag. Or it could pullback and consider a move to the bottom of the flag, so there's a lot of possibilities here.
BND (Bonds / F-fund) was flat and remains in a tight range and coiling near the 50 and 200 day moving averages. A big move to start the New Year could be coming, but which way?
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
To get weekly or daily notifications when we post new commentary, sign up HERE.
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.
