Stocks were mixed to start December with big tech leading wire to wire while the Dow and small caps couldn't quite get out of the starting gate. The gains in big tech helped the Nasdaq and the S&P to decent gains, but the Dow, small caps, even the Transports, were all down on the day. Bond yields were choppy but near flat, but bond prices and the F-fund had a small gain. The I-fund rallied despite strength in the dollar.
Yesterday was interesting in that the Monday after Thanksgiving tends to be on the bearish side, but the first trading day in December has a more bullish bias, and yesterday the two happened to land on the same day, and the results were mixed, as we stated.
You can see the positive breadth in the Nasdaq while the NYSE leaned on the negative side with more stocks down than up.
I won't read too much into one day, although what is going on with the DWCPF (small caps / S-fund) right now is interesting with the extremely flat action over the last week. We saw a couple other instances of sideways consolidation after rallies, so if I had to guess, this will eventually resolve itself to the upside, but we could see more flat action, or even a quick move lower to try to push the weaker holding bulls out of this before it goes higher.
The one year chart of the S-fund shows that it is getting a little extended, but it had been lagging for quite a while and it is only now nearing the return of the C-fund for the year. The fact that it was able to break above all of those resistance levels tells me that, even if this is going to pull back, there is a ton of support below near 2400 and 2350 to keep it from getting too serious. If it does fall that far I would think dip buyers will start throwing money at it with enthusiasm.
The 10-year Treasury Yield is still in the process of pulling back, but it seems more likely that this will trade in a range rather than trend lower, now that we are seeing higher growth and some stickiness in inflation. The support between 4.1% and 4.2% looks firm enough to potentially be the bottom of this pullback. Remember, bonds and the F-fund move counter to the direction of yields.
One other caveat: Like the dollar, the bond market is a tough market to crack in the short-term so, while I expect yields to firm up in this 4.1% area, it wouldn't surprise me if they did fall - just because they like to fool me.
Big day on Friday as we'll get the November jobs report. That could change things in the bond market.
The S&P 500 (C-fund) was content in hanging around its breakout line, and again it was with the help of the big tech stocks. At some point this should come down to test that breakout level but it could move up a little first as the stair-step rally continues. Rally, consolidate, rally, repeat.
ACWX was up 0.33% yesterday, and that's a big gain considering the dollar (UUP) was up 0.60%. It continues to hold above that 200-day EMA but there is resistance in the area that could make or break this relief rally.
You can see the updated I-fund and other TSP share prices and returns posted by about 8:30 PM ET daily here: https://www.tsptalk.com/tsp_share_prices.php
BND (bonds / F-fund) was up and it actually filled in the open gap from Friday before rally to the positive close. There seems to be a bid under bonds as we get closer to Friday's jobs report.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
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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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Yesterday was interesting in that the Monday after Thanksgiving tends to be on the bearish side, but the first trading day in December has a more bullish bias, and yesterday the two happened to land on the same day, and the results were mixed, as we stated.
You can see the positive breadth in the Nasdaq while the NYSE leaned on the negative side with more stocks down than up.
I won't read too much into one day, although what is going on with the DWCPF (small caps / S-fund) right now is interesting with the extremely flat action over the last week. We saw a couple other instances of sideways consolidation after rallies, so if I had to guess, this will eventually resolve itself to the upside, but we could see more flat action, or even a quick move lower to try to push the weaker holding bulls out of this before it goes higher.
The one year chart of the S-fund shows that it is getting a little extended, but it had been lagging for quite a while and it is only now nearing the return of the C-fund for the year. The fact that it was able to break above all of those resistance levels tells me that, even if this is going to pull back, there is a ton of support below near 2400 and 2350 to keep it from getting too serious. If it does fall that far I would think dip buyers will start throwing money at it with enthusiasm.
The 10-year Treasury Yield is still in the process of pulling back, but it seems more likely that this will trade in a range rather than trend lower, now that we are seeing higher growth and some stickiness in inflation. The support between 4.1% and 4.2% looks firm enough to potentially be the bottom of this pullback. Remember, bonds and the F-fund move counter to the direction of yields.
One other caveat: Like the dollar, the bond market is a tough market to crack in the short-term so, while I expect yields to firm up in this 4.1% area, it wouldn't surprise me if they did fall - just because they like to fool me.
Big day on Friday as we'll get the November jobs report. That could change things in the bond market.
The S&P 500 (C-fund) was content in hanging around its breakout line, and again it was with the help of the big tech stocks. At some point this should come down to test that breakout level but it could move up a little first as the stair-step rally continues. Rally, consolidate, rally, repeat.
ACWX was up 0.33% yesterday, and that's a big gain considering the dollar (UUP) was up 0.60%. It continues to hold above that 200-day EMA but there is resistance in the area that could make or break this relief rally.
You can see the updated I-fund and other TSP share prices and returns posted by about 8:30 PM ET daily here: https://www.tsptalk.com/tsp_share_prices.php
BND (bonds / F-fund) was up and it actually filled in the open gap from Friday before rally to the positive close. There seems to be a bid under bonds as we get closer to Friday's jobs report.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
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.
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.
