The bulls finally showed up putting together a strong rally on the second to last trading day of the year. The Dow gained 345-points and we saw gains of 1.5 to 2.5% in the various indices. Bond yields and the dollar were down making it easier for stocks, and a slightly weaker than expected initial jobless claims number helped investors lean on the side of the rate hikes may finally be making an impact of the labor market, which is what the Fed is looking for.
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Of course the action seems related to the seasonality in that, because of the 2-day settlement rule for trades, almost all of the tax selling was done by Wednesday and that opened the door for the bulls to do some buying without that selling pressure for a change.
The 10-year Yield was down after a big 3-day rally that had put pressure on the normal Santa Claus rally period for stocks. The dollar was also down giving prices a boost. The chart of the dollar ETF UUP pushed back again from the 200-day moving averages as it continues to stair step down off the fall highs. If that trend continues and the moving average hold as resistance, perhaps stocks can get off to a good start in 2023. Otherwise, a breakout to the upside here may set the tone for a test of the October lows.
Rather than get into speculating during this type of year and because the start of a new year tends to be explosive, volatile and unpredictable, I'll post some data that I have kept over the years so you can see how prior years ended and new years began.
This shows the final two days of a year and the first 3 of the next year. If you can find a pattern, perhaps you'll have a sense of what the next few days will bring. Make note of the end of 2008 (last "real" bear market) and start of 2009.
There's old saying that says, how goes January, so goes the year. Moreover, how goes the first few days of January, so goes January, hence so goes the new year.
Whether it has any merit, I'll let you decide but I have also kept this chart up showing what happened during the first two trading days of a new year, and the the last trading day of that year, and what happened to the S&P 500 (C-fund) by the end of that year. A week from today we'll know how January 2023 started and perhaps give us an idea of what's in store for the full year? Maybe.
Holiday Closing info from tsp.gov:
"Some financial markets will be closed on Monday, January 2 in observance of the New Year's Day holiday. The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (January 2) will be processed Tuesday night (January 3), at Tuesday's closing share prices."
Admin Note: Don't forget to login to the TSP Talk AutoTracker if you haven't for a while. Accounts that have been idle for too long won't rollover into the New Year. I'll remind everyone again during the week before New Year's but in case you won't be around, here is your reminder. If you are not already on the AutoTracker, this is a good time to start so that we track your full year in 2023. It's free. More info on creating a new account: AutoTracker - How to get started
The S&P 500 (C-fund) was up sharply and remains in that old gap area from the CPI rip rally back in November. Eerily, yesterday's high was right at the top of that gap so it did act as some resistance, at least for a day. And in the last 9 trading days there have been 7 closes within that gap. There was one close above it, and one close below it, and both reversed quickly back into it. What this means, I am not totally sure, but it seems to be significant and the next move above or below it could determine that next longer term direction for stocks.
The DWCPF (S-fund) had a big day gaining 2.5% yesterday. It's in one of the those flag formations that is bearish while its forming in the short term, but the "F" flags often break in the opposite direction of the flag, which mean perhaps an eventual upside breakout? Maybe, but that breakdown below the blue lines certainly doesn't look bullish and the 1620 area looks like a tough resistance area if it does manage to break to the upside.
The EFA / I-fund continues its crawl along the top of some major moving averages which have been holding nicely, but in the process that looks like a bearish flag forming. This may all depend on which way the dollar breaks as we talked about up top. A strong dollar tends to hurt this fund, and a weak dollar helps it.
BND / F-fund finally had an up day after the recent precipitous pullback it has experienced off the early December high. There is some support near 71.50 and some open gaps above, so perhaps a little relief is due here.
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 so much for reading. Have a great New Years weekend and we'll see you back here on Tuesday.
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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[TR]
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[TD="width: 338, align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
Of course the action seems related to the seasonality in that, because of the 2-day settlement rule for trades, almost all of the tax selling was done by Wednesday and that opened the door for the bulls to do some buying without that selling pressure for a change.
The 10-year Yield was down after a big 3-day rally that had put pressure on the normal Santa Claus rally period for stocks. The dollar was also down giving prices a boost. The chart of the dollar ETF UUP pushed back again from the 200-day moving averages as it continues to stair step down off the fall highs. If that trend continues and the moving average hold as resistance, perhaps stocks can get off to a good start in 2023. Otherwise, a breakout to the upside here may set the tone for a test of the October lows.
Rather than get into speculating during this type of year and because the start of a new year tends to be explosive, volatile and unpredictable, I'll post some data that I have kept over the years so you can see how prior years ended and new years began.
This shows the final two days of a year and the first 3 of the next year. If you can find a pattern, perhaps you'll have a sense of what the next few days will bring. Make note of the end of 2008 (last "real" bear market) and start of 2009.
There's old saying that says, how goes January, so goes the year. Moreover, how goes the first few days of January, so goes January, hence so goes the new year.
Whether it has any merit, I'll let you decide but I have also kept this chart up showing what happened during the first two trading days of a new year, and the the last trading day of that year, and what happened to the S&P 500 (C-fund) by the end of that year. A week from today we'll know how January 2023 started and perhaps give us an idea of what's in store for the full year? Maybe.
Holiday Closing info from tsp.gov:
"Some financial markets will be closed on Monday, January 2 in observance of the New Year's Day holiday. The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (January 2) will be processed Tuesday night (January 3), at Tuesday's closing share prices."
Admin Note: Don't forget to login to the TSP Talk AutoTracker if you haven't for a while. Accounts that have been idle for too long won't rollover into the New Year. I'll remind everyone again during the week before New Year's but in case you won't be around, here is your reminder. If you are not already on the AutoTracker, this is a good time to start so that we track your full year in 2023. It's free. More info on creating a new account: AutoTracker - How to get started
The S&P 500 (C-fund) was up sharply and remains in that old gap area from the CPI rip rally back in November. Eerily, yesterday's high was right at the top of that gap so it did act as some resistance, at least for a day. And in the last 9 trading days there have been 7 closes within that gap. There was one close above it, and one close below it, and both reversed quickly back into it. What this means, I am not totally sure, but it seems to be significant and the next move above or below it could determine that next longer term direction for stocks.
The DWCPF (S-fund) had a big day gaining 2.5% yesterday. It's in one of the those flag formations that is bearish while its forming in the short term, but the "F" flags often break in the opposite direction of the flag, which mean perhaps an eventual upside breakout? Maybe, but that breakdown below the blue lines certainly doesn't look bullish and the 1620 area looks like a tough resistance area if it does manage to break to the upside.
The EFA / I-fund continues its crawl along the top of some major moving averages which have been holding nicely, but in the process that looks like a bearish flag forming. This may all depend on which way the dollar breaks as we talked about up top. A strong dollar tends to hurt this fund, and a weak dollar helps it.
BND / F-fund finally had an up day after the recent precipitous pullback it has experienced off the early December high. There is some support near 71.50 and some open gaps above, so perhaps a little relief is due here.
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 so much for reading. Have a great New Years weekend and we'll see you back here on Tuesday.
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.
