I hope everyone had a nice Christmas and long holiday weekend! It's back to the grind but this week will have a holiday feel with lighter trading volume, and the bulls have the historical advantage. The Dow was down slightly on Friday and it took a last hour rally to push the S&P and Nasdaq back into positive territory after a positive morning, but the bears have been hibernating so it didn't take much effort from the bulls.
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For the rest of the year (this week) it could get a little choppy, especially toward the end of the week, as tax selling will push settlement dates into next year for those who may have been looking to sell but wanted to defer the capital gains out another year.
It's rare - if it's ever happened - to have stocks rally for 8 straight weeks leading into the traditional Santa Claus rally week so this is a little uncharted territory. In 2019 there were 5 straight positive weeks heading into the final week of the year and the S&P 500 was down during that final week, so the bias this week will be bullish, but it may not be all that easy with some potential strategic tax selling going on.
Other than that, there's not a whole lot on the schedule so it's the bulls' game to lose as the bears will only have surprise headlines and perhaps that tax selling profit taking on their side.
After being pretty proud of myself for missing the losses during the 2022 bear market, the market did it's usual humbling job and it's been a rough 2023 for me as I did not take advantage of a lot of what the market was dishing out late in the year, after jumping on some dips that did not pan out in the first half of the year. I need to reevaluate my sentiment as the sketchy fundamental picture in 2023 turns into a lot of optimism for 2024 now that the Fed is likely done raising interest rates. But when stocks go straight up like they have been, market timers can be chewed up and spilt out, while the trend traders and buy and holders celebrate.
They tell us to not fight the Fed and that's absolutely true as the market is most concerned with interest rates, ease of money (liquidity), and the economy, although the economy is a distant 3rd. There is still concern about a recession in 2024 but obviously the stock market has brushed that aside in lieu of the Fed's new dovish stance. They are still reducing their balance sheet, but the pace has slowed recently and the dollar and investors don't seem overly concerned about it at the moment.
Bonds and the small caps have been roaring and the question going forward is how much is left on that bone, and even if there is more, can they continue to move higher without a meaningful pullback, something we haven't seen since October?
The distance above the 50 and 200 day averages on these charts is on the extreme side, as are many oscillating type indicators that depict overbought and oversold levels.
I will be checking in every day, but I don't know who is paying attention this week so I'll probably keep things brief unless something meaningful happens.
DWCPF (S-fund) remains in an ascending trading channel whose angle of incline doesn't seem sustainable, yet it has lasted two months already. Open gaps fill the entire channel all the way down to the October lows, so 2024 will be an interesting year. Is it possible to see 4 meaningful gaps go unfilled for much longer? Not typically, but is it "different this time?"
EFA (I-fund) has also been on quite a run as it flirts with multi-year highs. Again, great chart formation looking out months, but how long can this rally sustain itself without a meaningful pullback? Perhaps a double top pullback is in store for early 2024?
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
Daily Market Commentary Archives
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.
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[TD="width: 338, align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
For the rest of the year (this week) it could get a little choppy, especially toward the end of the week, as tax selling will push settlement dates into next year for those who may have been looking to sell but wanted to defer the capital gains out another year.
It's rare - if it's ever happened - to have stocks rally for 8 straight weeks leading into the traditional Santa Claus rally week so this is a little uncharted territory. In 2019 there were 5 straight positive weeks heading into the final week of the year and the S&P 500 was down during that final week, so the bias this week will be bullish, but it may not be all that easy with some potential strategic tax selling going on.
Other than that, there's not a whole lot on the schedule so it's the bulls' game to lose as the bears will only have surprise headlines and perhaps that tax selling profit taking on their side.
After being pretty proud of myself for missing the losses during the 2022 bear market, the market did it's usual humbling job and it's been a rough 2023 for me as I did not take advantage of a lot of what the market was dishing out late in the year, after jumping on some dips that did not pan out in the first half of the year. I need to reevaluate my sentiment as the sketchy fundamental picture in 2023 turns into a lot of optimism for 2024 now that the Fed is likely done raising interest rates. But when stocks go straight up like they have been, market timers can be chewed up and spilt out, while the trend traders and buy and holders celebrate.
They tell us to not fight the Fed and that's absolutely true as the market is most concerned with interest rates, ease of money (liquidity), and the economy, although the economy is a distant 3rd. There is still concern about a recession in 2024 but obviously the stock market has brushed that aside in lieu of the Fed's new dovish stance. They are still reducing their balance sheet, but the pace has slowed recently and the dollar and investors don't seem overly concerned about it at the moment.
Bonds and the small caps have been roaring and the question going forward is how much is left on that bone, and even if there is more, can they continue to move higher without a meaningful pullback, something we haven't seen since October?
The distance above the 50 and 200 day averages on these charts is on the extreme side, as are many oscillating type indicators that depict overbought and oversold levels.
I will be checking in every day, but I don't know who is paying attention this week so I'll probably keep things brief unless something meaningful happens.
DWCPF (S-fund) remains in an ascending trading channel whose angle of incline doesn't seem sustainable, yet it has lasted two months already. Open gaps fill the entire channel all the way down to the October lows, so 2024 will be an interesting year. Is it possible to see 4 meaningful gaps go unfilled for much longer? Not typically, but is it "different this time?"
EFA (I-fund) has also been on quite a run as it flirts with multi-year highs. Again, great chart formation looking out months, but how long can this rally sustain itself without a meaningful pullback? Perhaps a double top pullback is in store for early 2024?
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
Daily Market Commentary Archives
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.
