Happy New Year everyone, and Happy New Decade as well! Stocks ended 2019 with a late flurry higher to turn a modestly negative day into a positive day by the close. The Dow gained 76-points on the day, cementing in very solid annual gains for the year. The S&P 500, Nasdaq, and small caps all gained about 0.3% on the day, while the I-fund lagged, and bonds were down.
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It's a New Year and we could probably talk all day about the possibilities for 2020, but it could be another light volume trading day with many folks taking off Thursday and Friday to extend another weekend. That means anything can happen, and it may or may not be meaningful technically.
I have said in the past that the first few days in January tend to set the tone for the month, and in turn, for the year. That was certainly the case in 2019.
That explosive rally to start 2019 took me by surprise. Yes, we anticipated an oversold rally in early January 2019, after the devastation in December 2018, but the strength of the rally put us behind the 8-ball from the get go. My TSP Talk Plus System made 1.83% in January. Sounds satisfying to me, until you look at what happened in the indices. The C, S, and I funds were up 8.0%, 11.6%, and 6.6% respectively that month and so we were playing catch up all year. We made a run during the summer and nearly caught up after the weak months of May and August, but the relentless rally to end the year was equally tough to match as a market timer. So I ended up with a gain of 15.5% for the year. I would take that almost any year, but with the S&P up nearly 30%, it was not really a good year for me.
Market timers don't tend to get rewarded until the market starts to give back. You can only beat the market averages by being out of stocks are down. And since we haven't had a serious bear market in more than 10 years now, the buy and holders are quite emboldened at this point.
Dennis Gartman wrote his final newsletter after 30 years recently. I got the following information from a Barron's article, and I have to agree with him to some extent.
"He [Gartman] describes the current environment as a “kids market,” relying on a phrase introduced in the 1960s by Adam Smith, the pen name of George Goodman, in his classic book The Money Game. Goodman used the phrase to refer to an investment environment in which the traders making the most money are those too young to remember the last bear market.
"Gartman describes today’s “kids” as “young, brash, utterly naive, ill-educated, egregiously overconfident, neophyte-yet-fearless ‘investors.’” Market veterans such as himself are left to do little more than stand on the sidelines, “fearful yet envious” of the kids’ profits."
I can only assume that history will repeat itself, as it has done over and over, and we'll have our day while the buy and holders learn their lesson the hard way.
Admin Notes:
AutoTracker: Do you want us to track your returns? Just mirror your TSP IFT's in our AutoTracker and we will track your daily, weekly, monthly, and annual returns for you. We're getting it ready for 2020 so make sure that you've logged in to the AutoTracker within the last few months so we know you're still around and want to keep your account active for next year. If you're new to the AutoTracker, go here for more info and to get started. If new, you may need to check your spam folders to confirm a new forum account. Gmail, and a few others, tend to block some of our automated forum emails. More
2020 Guess the Dow Contest: It's time for our annual Guess the Dow Contest. Make your guess here... Guess the Dow
The S&P 500 (C-fund) was down for much of the day on Tuesday before the late afternoon rally pushed it into positive territory. That's a positive reversal day and could bode well for stocks early today, but it was a light volume reversal and perhaps can't be as trusted as a normal or high volume reversal. The open gap near 3205 was touched but not quite filled.
The DWCPF (S-fund) had a similar day although its was leading in early trading and faded a little more late and closed off the highs, unlike the S&P. You can see the obvious rising trading channel and that's what we'll be watching to start the New Year - how long can it continue?
The EFA (I-fund) was hit hard on Monday and bounced back on Tuesday. The reason the I-fund price may not be as high as the EFA indicated was because of the late rally in U.S. stocks, which weren't accounted for in the overseas markets because they were closed at the time. There's a lot of open gaps below on the chart, but that's the nature of this index because of the overnight market trading.
The dollar has been falling of late, really boosting the I-fund. On Tuesday the dollar broke down, although it did close strongly. That isn't a great formation with it trading below 26.00 now, but as you can see in the longer term chart below, the 200-day EMA is being tested for the first time a couple of years. Can that act as support going forward?
The AGG (F-fund / bonds) just keeps us guessing. The short and longer term charts have bullish patterns, but the day to day action is anything but consistent. It remains above that bull flag, but it hasn't been strong enough to do much since that breakout. It may be the quiet holiday trading and we could get a more definitive move once we're a few days into the New Year.
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
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.
[TABLE="align: center"]
[TR]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[TD][/TD]
[TD="align: center"]
[/TR]
[/TABLE]
It's a New Year and we could probably talk all day about the possibilities for 2020, but it could be another light volume trading day with many folks taking off Thursday and Friday to extend another weekend. That means anything can happen, and it may or may not be meaningful technically.
I have said in the past that the first few days in January tend to set the tone for the month, and in turn, for the year. That was certainly the case in 2019.
That explosive rally to start 2019 took me by surprise. Yes, we anticipated an oversold rally in early January 2019, after the devastation in December 2018, but the strength of the rally put us behind the 8-ball from the get go. My TSP Talk Plus System made 1.83% in January. Sounds satisfying to me, until you look at what happened in the indices. The C, S, and I funds were up 8.0%, 11.6%, and 6.6% respectively that month and so we were playing catch up all year. We made a run during the summer and nearly caught up after the weak months of May and August, but the relentless rally to end the year was equally tough to match as a market timer. So I ended up with a gain of 15.5% for the year. I would take that almost any year, but with the S&P up nearly 30%, it was not really a good year for me.
Market timers don't tend to get rewarded until the market starts to give back. You can only beat the market averages by being out of stocks are down. And since we haven't had a serious bear market in more than 10 years now, the buy and holders are quite emboldened at this point.
Dennis Gartman wrote his final newsletter after 30 years recently. I got the following information from a Barron's article, and I have to agree with him to some extent.
"He [Gartman] describes the current environment as a “kids market,” relying on a phrase introduced in the 1960s by Adam Smith, the pen name of George Goodman, in his classic book The Money Game. Goodman used the phrase to refer to an investment environment in which the traders making the most money are those too young to remember the last bear market.
"Gartman describes today’s “kids” as “young, brash, utterly naive, ill-educated, egregiously overconfident, neophyte-yet-fearless ‘investors.’” Market veterans such as himself are left to do little more than stand on the sidelines, “fearful yet envious” of the kids’ profits."
I can only assume that history will repeat itself, as it has done over and over, and we'll have our day while the buy and holders learn their lesson the hard way.
Admin Notes:
AutoTracker: Do you want us to track your returns? Just mirror your TSP IFT's in our AutoTracker and we will track your daily, weekly, monthly, and annual returns for you. We're getting it ready for 2020 so make sure that you've logged in to the AutoTracker within the last few months so we know you're still around and want to keep your account active for next year. If you're new to the AutoTracker, go here for more info and to get started. If new, you may need to check your spam folders to confirm a new forum account. Gmail, and a few others, tend to block some of our automated forum emails. More
2020 Guess the Dow Contest: It's time for our annual Guess the Dow Contest. Make your guess here... Guess the Dow
The S&P 500 (C-fund) was down for much of the day on Tuesday before the late afternoon rally pushed it into positive territory. That's a positive reversal day and could bode well for stocks early today, but it was a light volume reversal and perhaps can't be as trusted as a normal or high volume reversal. The open gap near 3205 was touched but not quite filled.
The DWCPF (S-fund) had a similar day although its was leading in early trading and faded a little more late and closed off the highs, unlike the S&P. You can see the obvious rising trading channel and that's what we'll be watching to start the New Year - how long can it continue?
The EFA (I-fund) was hit hard on Monday and bounced back on Tuesday. The reason the I-fund price may not be as high as the EFA indicated was because of the late rally in U.S. stocks, which weren't accounted for in the overseas markets because they were closed at the time. There's a lot of open gaps below on the chart, but that's the nature of this index because of the overnight market trading.
The dollar has been falling of late, really boosting the I-fund. On Tuesday the dollar broke down, although it did close strongly. That isn't a great formation with it trading below 26.00 now, but as you can see in the longer term chart below, the 200-day EMA is being tested for the first time a couple of years. Can that act as support going forward?
The AGG (F-fund / bonds) just keeps us guessing. The short and longer term charts have bullish patterns, but the day to day action is anything but consistent. It remains above that bull flag, but it hasn't been strong enough to do much since that breakout. It may be the quiet holiday trading and we could get a more definitive move once we're a few days into the New Year.
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
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.
