Stocks were mixed again on Tuesday, making fund picking interesting for us TSP'ers. The Dow fell 201-points, the S&P 500 was down, as were the Transports and the I-fund, but the Nasdaq rallied, and once again the small caps showed the others up by rallying 1% on the day. The dollar was up again and that may be causing the divergences.
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We're seeing consolidation in some of the charts as the S&P 500 was down for a third straight day, and seven of the last 10 trading days. That's not a bad thing given how far things have come, but it's a little surprising to be happening during Christmas week. The bulls aren't totally giving up, however. They are just rolling money into other assets like small caps, and the COVID situation continues to push money back and forth between economic recovery stocks, and stay at home stocks. Yesterday the stay at home stocks won out, and the dollar put some pressure on other sectors.
A strong dollar puts pressure on most prices, and more so larger global companies, which is one reason why we see the Dow and S&P 500 lagging the small caps this week, which tend to do more business in the states where the dollar's strength isn't as impactive. Whether this week's relief rally in the dollar is one of those pre-holiday reversals, or a legit low caused by a stimulus package that may not have been as large as expected, remains to be seen, but we could find out next week after the Christmas weekend. Of course the following weekend is another holiday, and one with another bullish bias.
The internals were mixed yesterday with tech stocks in the Nasdaq performing better than the NYSE stocks, which saw negative breadth in up / down issues as well as advance / decline share volume.
The TSP is closed on Friday for Christmas but so far I haven't seen anything about Thursday. The market is open for a half day of trading on Thursday, but it is now a government holiday. Since they haven't said anything yet, I'm assuming they will be processing transactions.
Christmas Eve has been positive for the S&P 500 about 65% of the time over the past 30 years so the bulls have the advantage, but this is 2020 and who can trust it to be typical?
The S&P 500 (C-fund) is back in its rising trading channel despite Monday's scare. The recent consolidating isn't a bad thing, unless or until, we see some breakdown in the bullish patterns, and that's why Monday's reversal was so important. Volume is starting to dry up as we'd expect this week, and barring any news events, that should continue into next week. This is where the bulls get the advantage, although any negative news can produce a more pronounced move because of the light volume.
The DWCPF Index / S-fund just continues to shine and defy gravity, and this probably isn't the week that the bears will go after it. Next week - maybe. In January - more likely.
EFA / I-fund was down on the day, and as I pointed out above, the dollar was up sharply again making things very tough on the EAFE index. This chart has broken down and so far no move back up into the rising channel. That's two closes below support and a warning sign for sure, especially with 3 or 4 large open gaps below on the chart, but we do have a 3+ day rule before confirming breakout or breakdown.
The VIX fell almost 4% yesterday, and that's more like it during a holiday week. A 24 handle is still quite elevated for this time of year so the possibility for some volatile moves is still out there.
BND (Bonds / F-fund) was up sharply on the day and moved toward the top of its recent range between 87.80 and 88.30. It looks like a bull flag, but this bond chart always tends to throw me a curve, and I always had trouble hitting the curve ball.
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. 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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We're seeing consolidation in some of the charts as the S&P 500 was down for a third straight day, and seven of the last 10 trading days. That's not a bad thing given how far things have come, but it's a little surprising to be happening during Christmas week. The bulls aren't totally giving up, however. They are just rolling money into other assets like small caps, and the COVID situation continues to push money back and forth between economic recovery stocks, and stay at home stocks. Yesterday the stay at home stocks won out, and the dollar put some pressure on other sectors.
A strong dollar puts pressure on most prices, and more so larger global companies, which is one reason why we see the Dow and S&P 500 lagging the small caps this week, which tend to do more business in the states where the dollar's strength isn't as impactive. Whether this week's relief rally in the dollar is one of those pre-holiday reversals, or a legit low caused by a stimulus package that may not have been as large as expected, remains to be seen, but we could find out next week after the Christmas weekend. Of course the following weekend is another holiday, and one with another bullish bias.
The internals were mixed yesterday with tech stocks in the Nasdaq performing better than the NYSE stocks, which saw negative breadth in up / down issues as well as advance / decline share volume.
The TSP is closed on Friday for Christmas but so far I haven't seen anything about Thursday. The market is open for a half day of trading on Thursday, but it is now a government holiday. Since they haven't said anything yet, I'm assuming they will be processing transactions.
Christmas Eve has been positive for the S&P 500 about 65% of the time over the past 30 years so the bulls have the advantage, but this is 2020 and who can trust it to be typical?
The S&P 500 (C-fund) is back in its rising trading channel despite Monday's scare. The recent consolidating isn't a bad thing, unless or until, we see some breakdown in the bullish patterns, and that's why Monday's reversal was so important. Volume is starting to dry up as we'd expect this week, and barring any news events, that should continue into next week. This is where the bulls get the advantage, although any negative news can produce a more pronounced move because of the light volume.
The DWCPF Index / S-fund just continues to shine and defy gravity, and this probably isn't the week that the bears will go after it. Next week - maybe. In January - more likely.
EFA / I-fund was down on the day, and as I pointed out above, the dollar was up sharply again making things very tough on the EAFE index. This chart has broken down and so far no move back up into the rising channel. That's two closes below support and a warning sign for sure, especially with 3 or 4 large open gaps below on the chart, but we do have a 3+ day rule before confirming breakout or breakdown.
The VIX fell almost 4% yesterday, and that's more like it during a holiday week. A 24 handle is still quite elevated for this time of year so the possibility for some volatile moves is still out there.
BND (Bonds / F-fund) was up sharply on the day and moved toward the top of its recent range between 87.80 and 88.30. It looks like a bull flag, but this bond chart always tends to throw me a curve, and I always had trouble hitting the curve ball.
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. 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.
