The New Year started with decent gains and the final two days of the typical Santa Claus rally concludes today. There were no guarantees that the day would be bullish, but one thing we can usually count on during the first week of a new year is volatility, and we got a dose of that early before the bulls took charge. We see the solid gains in the indices but perhaps the big news yesterday was the sell off in bonds. The dollar also rallied sharply after pulling back for a couple of weeks.
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The S&P 500 / C-fund opened higher, then reversed down and was at its lows of the day right before the TSP trading deadline, and then of course it bounced back to close at the highs of the day. That sure makes it tough to make an inter-fund transfer decision in the morning. It closed at an all time high although it is still below that area that has acted as resistance over the last week. Prior consolidations like this have led to pullbacks, even though it looks like possible a bull flag. As we discussed above regarding the volatility of the first few days in January, I wouldn't be surprised if we get a down day today, just to confuse as many people as possible.
DWCPF (small caps / S-fund) was down quite a bit at its lows yesterday but the buying picked back up and it closed with a healthy gain. However, it continues to sit just below that group of moving averages, which have now become firm resistance. It looks like a possible bull flag forming but there's an open gap down near 2100 that could draw some attention.
The EFA (I-fund) had a good day despite a solid rally in the dollar. Like the other charts, it looks like a possible bull flag is forming, although it is at the top of that large ascending trading channel.
BND (Bonds / F-fund) took a shellacking as bonds gapped down while in the processing of finally filling that open gap from late November. This has been in a downtrend for a while so it will now likely test those November lows.
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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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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Bonds were down sharply which pushed yields higher and the 10-Year Treasury Yield ran all the way up to finally fill in that open gap near 1.64%. I know some people still don't buy the whole gap thing, but isn't it amazing that yesterday's high was the exact top of that open gap from that post Thanksgiving Friday sell off in yields?
The dollar was up sharply doing a little post holiday reversal after it was sinking all during the holidays but the 50-day EMA acted as strong support again. It did peak near 25.80 where there is some resistance.
If there's one thing I've learned over the years about the first few days of a New Year, it's that it can be volatile. Historically they are very bullish days, as we saw yesterday, but when they're bad, they can be very bad.
The first trading day in 2021 was a big down day, but it bounced back in the following days.
In 2020 the S&P 500 rallied big on day 1, then gave most of it back on day #2. 2019 was similar with up, down, up action with wide swings, but culminating with a strong January rally.
January of 2018 was one of those straight up months.
2016 it was straight down. 2014 and 2015 (not shown above) saw three negative days to start the year.
I'm not giving you too much useful information there, but it just goes to show that day one in January doesn't necessarily represent a trend in this case.
And for those of you who like to crunch the numbers, here's a chart I posted couple of weeks ago showing the action in the S&P 500 during the last two trading days of the prior year, and the first three trading days of the new year.
And here's where we are in the 2021 - 2022 version so far:
One more time -- Congratulations to tom1tom1 for winning the 2021 TSP Talk Autotracker with an amazing gain of 38.72%. felixthecat took took second with an impressive 36.03% gain, and SO68 was third at +30.98. EricDeLee was a close 4th at +30.87%. Caribbeandan also had a gain over 30%. The final prize list here is posted here:
Also, long time member crommie won the 2021 Guess the Dow Contest by picking 36,325, which was just 13 points off the Dow's close on Friday of 36,338. Nice job!
The 2022 version of the Guess the Dow Contest is posted in the forum and you'll have until next Sunday to make your guess.
The dollar was up sharply doing a little post holiday reversal after it was sinking all during the holidays but the 50-day EMA acted as strong support again. It did peak near 25.80 where there is some resistance.
If there's one thing I've learned over the years about the first few days of a New Year, it's that it can be volatile. Historically they are very bullish days, as we saw yesterday, but when they're bad, they can be very bad.
The first trading day in 2021 was a big down day, but it bounced back in the following days.
In 2020 the S&P 500 rallied big on day 1, then gave most of it back on day #2. 2019 was similar with up, down, up action with wide swings, but culminating with a strong January rally.
January of 2018 was one of those straight up months.
2016 it was straight down. 2014 and 2015 (not shown above) saw three negative days to start the year.
I'm not giving you too much useful information there, but it just goes to show that day one in January doesn't necessarily represent a trend in this case.
And for those of you who like to crunch the numbers, here's a chart I posted couple of weeks ago showing the action in the S&P 500 during the last two trading days of the prior year, and the first three trading days of the new year.
And here's where we are in the 2021 - 2022 version so far:
One more time -- Congratulations to tom1tom1 for winning the 2021 TSP Talk Autotracker with an amazing gain of 38.72%. felixthecat took took second with an impressive 36.03% gain, and SO68 was third at +30.98. EricDeLee was a close 4th at +30.87%. Caribbeandan also had a gain over 30%. The final prize list here is posted here:
Also, long time member crommie won the 2021 Guess the Dow Contest by picking 36,325, which was just 13 points off the Dow's close on Friday of 36,338. Nice job!
The 2022 version of the Guess the Dow Contest is posted in the forum and you'll have until next Sunday to make your guess.
The S&P 500 / C-fund opened higher, then reversed down and was at its lows of the day right before the TSP trading deadline, and then of course it bounced back to close at the highs of the day. That sure makes it tough to make an inter-fund transfer decision in the morning. It closed at an all time high although it is still below that area that has acted as resistance over the last week. Prior consolidations like this have led to pullbacks, even though it looks like possible a bull flag. As we discussed above regarding the volatility of the first few days in January, I wouldn't be surprised if we get a down day today, just to confuse as many people as possible.
DWCPF (small caps / S-fund) was down quite a bit at its lows yesterday but the buying picked back up and it closed with a healthy gain. However, it continues to sit just below that group of moving averages, which have now become firm resistance. It looks like a possible bull flag forming but there's an open gap down near 2100 that could draw some attention.
The EFA (I-fund) had a good day despite a solid rally in the dollar. Like the other charts, it looks like a possible bull flag is forming, although it is at the top of that large ascending trading channel.
BND (Bonds / F-fund) took a shellacking as bonds gapped down while in the processing of finally filling that open gap from late November. This has been in a downtrend for a while so it will now likely test those November lows.
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.
