Stocks were sailing along for most of the day on Wednesday, but a very late headline reversed things, at least in some of the indices. The Dow gained 114-points, well below the +277 it had earlier in the day, and most of the downdraft happened in the final 10 minutes of trading, after President Trump vetoed the defense spending bill. That wasn't the stimulus deal sp perhaps investors overreacted?
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So far we've mostly seen typical holiday trading as volume has subsided, and there is a bullish bias in the days leading up to holidays.
There are a couple of tendencies that I talk about often that I want to repeat because they could be significant.
First, yesterday was a very light volume trading day, as we'd expect, and as we've talked about, the indices can get pushed around more easily in these situations. That's likely what we saw just before the bell rang on Wednesday, after President Trump vetoed the defense bill. Overreaction? Maybe. It wasn't the stimulus bill, but he's threatened to veto that as well.
The other thing is, in recent years I've noticed that during the week after Christmas stocks can flip direction from what happened during the week before Christmas. Unfortunately, as of Wednesday's close, we have a mixed bag with the S&P 500 (C-fund) being down for the week, while the DWCPF Index (S-fund) is up quite a bit, so that doesn't make it easy.
Yesterday's late reversal could be an indication of what is in store next week, as the president and congress hammer on some budget deals. Just a word of caution. There are a lot of things going on in D.C. right now besides the stimulus negotiations and the market could get dragged along like a rag doll in the the light trading atmosphere. Money managers may try to keep the indices propped up for end of year window dressing, and that could make the first week in January interesting. Bottom line, be careful over the next two weeks. I anticipate things getting volatile again at some point soon.
The market closes at 1 PM ET today and who knows what we'll be hearing? I'll make the chart section quick since I know most of you are not working today and want to get started on your holiday weekend.
The TSP is closed on Friday for Christmas, and since we haven't heard anything, I'm assuming they will be processing transactions today (Thursday.)
The S&P 500 (C-fund) was up slightly after giving up a solid gain in that final 10 minutes of trading. It remains in that rising channel but yesterday reminded us how quickly things can change, especially in a light trading volume environment. That's a negative reversal pattern, but was it warranted or an overreaction before the bell rang?
The DWCPF Index / S-fund just continues to outperform. The Russell 2000 was up big and that helped the S-fund hold onto a 0.22% gain, but that was well off the highs. Still, a new high was made both intraday, and on a closing basis. How long can it last?
EFA / I-fund was up nicely as the dollar tanked after Trump threatened to veto the stimulus bill. The problem I see is that the upside only went up to fill that open gap (blue) and then it stalled. All of the other gaps are down below on the chart (red.)
BND (Bonds / F-fund) was down as yields rallied, but this chart is getting quite congested suggesting a big move will be coming at some point - probably soon. I wish I knew 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
Thanks for reading. Merry Christmas and enjoy your long holiday weekend! We'll see you back here on Monday!
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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So far we've mostly seen typical holiday trading as volume has subsided, and there is a bullish bias in the days leading up to holidays.
There are a couple of tendencies that I talk about often that I want to repeat because they could be significant.
First, yesterday was a very light volume trading day, as we'd expect, and as we've talked about, the indices can get pushed around more easily in these situations. That's likely what we saw just before the bell rang on Wednesday, after President Trump vetoed the defense bill. Overreaction? Maybe. It wasn't the stimulus bill, but he's threatened to veto that as well.
The other thing is, in recent years I've noticed that during the week after Christmas stocks can flip direction from what happened during the week before Christmas. Unfortunately, as of Wednesday's close, we have a mixed bag with the S&P 500 (C-fund) being down for the week, while the DWCPF Index (S-fund) is up quite a bit, so that doesn't make it easy.
Yesterday's late reversal could be an indication of what is in store next week, as the president and congress hammer on some budget deals. Just a word of caution. There are a lot of things going on in D.C. right now besides the stimulus negotiations and the market could get dragged along like a rag doll in the the light trading atmosphere. Money managers may try to keep the indices propped up for end of year window dressing, and that could make the first week in January interesting. Bottom line, be careful over the next two weeks. I anticipate things getting volatile again at some point soon.
The market closes at 1 PM ET today and who knows what we'll be hearing? I'll make the chart section quick since I know most of you are not working today and want to get started on your holiday weekend.
The TSP is closed on Friday for Christmas, and since we haven't heard anything, I'm assuming they will be processing transactions today (Thursday.)
The S&P 500 (C-fund) was up slightly after giving up a solid gain in that final 10 minutes of trading. It remains in that rising channel but yesterday reminded us how quickly things can change, especially in a light trading volume environment. That's a negative reversal pattern, but was it warranted or an overreaction before the bell rang?
The DWCPF Index / S-fund just continues to outperform. The Russell 2000 was up big and that helped the S-fund hold onto a 0.22% gain, but that was well off the highs. Still, a new high was made both intraday, and on a closing basis. How long can it last?
EFA / I-fund was up nicely as the dollar tanked after Trump threatened to veto the stimulus bill. The problem I see is that the upside only went up to fill that open gap (blue) and then it stalled. All of the other gaps are down below on the chart (red.)
BND (Bonds / F-fund) was down as yields rallied, but this chart is getting quite congested suggesting a big move will be coming at some point - probably soon. I wish I knew 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
Thanks for reading. Merry Christmas and enjoy your long holiday weekend! We'll see you back here on Monday!
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.
