The market kept its winning ways going after Monday's fake out sell off. The Dow gained another 212-points, and this time the Nasdaq came along for the ride gaining 2.56% on the day. Small caps weren't far behind as it is starting to feel like a little bit of capitulating from the bears who had cash on the sidelines.
[TABLE="align: center"]
[TR]
[TD="align: center"] Daily TSP Funds Return
[TABLE="align: center"]
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[TD]
[/TD]
[TD="width: 362, align: center"]
[/TD]
[/TR]
[/TABLE]
When we came into this first week of the New Year, the consensus was that the market may be concerned about a democratic sweep in Georgia's run off elections this week, and that there was a rally scheduled in D.C. that could cause some problems. Well both happened and stocks, instead of pulling back on this news, decided to explode to the upside.
If there was a day of reckoning, it wasn't happening this week as the rally continues to add a little more froth to the top of its mug or beer stein, depending on whether you like froth on your latte or your beer.
So with the Senate now in the hands of the democrats, and as well as in the House and White House, the market is looking forward to more stimulus, and seems to be acting on it exclusively.
Tax hikes are likely just a matter of time, but given that we're in stimulus mode, it may not be for another next year, and the market isn't thinking about next year right now, but that bridge will be crossed at some other point.
For now we have a little bit of that party like it's 1999 thing going on. As some of you may remember, you could have throw a dart at the Wall Street Journal pages from the late 90's into 2000 and find a Nasdaq stock that was climbing almost every day. And even toward the end there, the angle of incline went even more parabolic.
There were a lot of pullbacks down to the 200-day EMA, which is normal activity. That is until that last stretch up in the six months from October 1999 to March of 2000. And that sort of feels like what we're seeing in recent months, although maybe not to the same extent yet.
But at some point, the piper must be paid, like it did in 2000 and for a couple years after.
Are we at those types of levels yet? Probably not. Should everybody sell every thing until we get another crash? Probably not. But if stocks are going straight up, they could come straight down.
If you are under invested, you'll get your chance. Normal bull market will have typical 5%, 10% and even 20% pullbacks / corrections along the way.
If you're not getting a chance and there are no pullbacks, that could mean we're in the parabolic stage and it will most likely come crashing down around us eventually. From what levels, I don't know. But the higher it goes, the further it can fall. At these current levels, I'm waiting for one of those pullbacks, and not necessarily a crash from a parabolic move yet.
It's only fair to give the bulls perspective, which is that cash levels from retail investors (mom and pop) are actually high. They've also paid off a lot of debt during the last year's lockdowns. This is a good recipe to continue to fuel a rally, so they may just keep on buying. That is until the big money decides to start pulling the plug and selling before mom and pop knows what's going on.
We get the December Jobs report this morning (Friday) and estimates are looking for a gain of 100,000 jobs, and an unemployment rate of 6.7%.
Earnings season will start to kick off next week and perhaps we'll get some confirmation of these high prices and valuations, or perhaps a sell the news reaction? Will companies be punished on a miss?
Administrative Notes:
Last day! We have an annual subscription sale going for our premium services. Even if you have an existing annual subscription, you will be able to add another year at a 25% discount, and monthly subscriptions can convert to annual to get this discount. More on that can be found here.
The 2021 "Guess the Dow" contest for forum members is going on now and we'll accept guesses until 5 PM ET on Sunday January 10. The winner gets a $100 Amazon e-gift card. More here:
The S&P 500 (C-fund) did the unexpected, as we may have come to expect, and pushed right through that tough resistance line (red) after two month of attempts. Is this the fake out to get those bears to capitulate? Often overshoots are opportunities to fade the direction of the market, but momentum is strong and stepping in front of this freight train may be a tough decision to make.
The DWCPF (small caps / S-fund) has gone up for three straight days after that Santa Claus rally sell off. Yes, as if timing the market wasn't tough enough, the only time that these small caps took a breather was during the seasonally strong (best of the year) Santa Claus Rally period from December 23 to January 4.
The EFA (I-fund) was up modestly as the dollar finally rallied (+0.58%) putting some pressure on the I-fund. The interesting part was that the UUP chart of the dollar actually broke its two-month downtrend yesterday. It's tough to call that a breakout yet after just one day, but that's how it would start.
BND (bonds / F-fund) got slammed again as it tested Wednesday's lows. A large open gap was created on Wednesday and like most charts, open gaps on the bond chart do tend to get filled eventually. However, there is also a gap down near 87.10 that is still open, so which gets filled first?
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. Have a great weekend!
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="width: 362, align: center"]
[/TR]
[/TABLE]
When we came into this first week of the New Year, the consensus was that the market may be concerned about a democratic sweep in Georgia's run off elections this week, and that there was a rally scheduled in D.C. that could cause some problems. Well both happened and stocks, instead of pulling back on this news, decided to explode to the upside.
If there was a day of reckoning, it wasn't happening this week as the rally continues to add a little more froth to the top of its mug or beer stein, depending on whether you like froth on your latte or your beer.
So with the Senate now in the hands of the democrats, and as well as in the House and White House, the market is looking forward to more stimulus, and seems to be acting on it exclusively.
Tax hikes are likely just a matter of time, but given that we're in stimulus mode, it may not be for another next year, and the market isn't thinking about next year right now, but that bridge will be crossed at some other point.
For now we have a little bit of that party like it's 1999 thing going on. As some of you may remember, you could have throw a dart at the Wall Street Journal pages from the late 90's into 2000 and find a Nasdaq stock that was climbing almost every day. And even toward the end there, the angle of incline went even more parabolic.
There were a lot of pullbacks down to the 200-day EMA, which is normal activity. That is until that last stretch up in the six months from October 1999 to March of 2000. And that sort of feels like what we're seeing in recent months, although maybe not to the same extent yet.
But at some point, the piper must be paid, like it did in 2000 and for a couple years after.
Are we at those types of levels yet? Probably not. Should everybody sell every thing until we get another crash? Probably not. But if stocks are going straight up, they could come straight down.
If you are under invested, you'll get your chance. Normal bull market will have typical 5%, 10% and even 20% pullbacks / corrections along the way.
If you're not getting a chance and there are no pullbacks, that could mean we're in the parabolic stage and it will most likely come crashing down around us eventually. From what levels, I don't know. But the higher it goes, the further it can fall. At these current levels, I'm waiting for one of those pullbacks, and not necessarily a crash from a parabolic move yet.
It's only fair to give the bulls perspective, which is that cash levels from retail investors (mom and pop) are actually high. They've also paid off a lot of debt during the last year's lockdowns. This is a good recipe to continue to fuel a rally, so they may just keep on buying. That is until the big money decides to start pulling the plug and selling before mom and pop knows what's going on.
We get the December Jobs report this morning (Friday) and estimates are looking for a gain of 100,000 jobs, and an unemployment rate of 6.7%.
Earnings season will start to kick off next week and perhaps we'll get some confirmation of these high prices and valuations, or perhaps a sell the news reaction? Will companies be punished on a miss?
Administrative Notes:
Last day! We have an annual subscription sale going for our premium services. Even if you have an existing annual subscription, you will be able to add another year at a 25% discount, and monthly subscriptions can convert to annual to get this discount. More on that can be found here.
The 2021 "Guess the Dow" contest for forum members is going on now and we'll accept guesses until 5 PM ET on Sunday January 10. The winner gets a $100 Amazon e-gift card. More here:
The S&P 500 (C-fund) did the unexpected, as we may have come to expect, and pushed right through that tough resistance line (red) after two month of attempts. Is this the fake out to get those bears to capitulate? Often overshoots are opportunities to fade the direction of the market, but momentum is strong and stepping in front of this freight train may be a tough decision to make.
The DWCPF (small caps / S-fund) has gone up for three straight days after that Santa Claus rally sell off. Yes, as if timing the market wasn't tough enough, the only time that these small caps took a breather was during the seasonally strong (best of the year) Santa Claus Rally period from December 23 to January 4.
The EFA (I-fund) was up modestly as the dollar finally rallied (+0.58%) putting some pressure on the I-fund. The interesting part was that the UUP chart of the dollar actually broke its two-month downtrend yesterday. It's tough to call that a breakout yet after just one day, but that's how it would start.
BND (bonds / F-fund) got slammed again as it tested Wednesday's lows. A large open gap was created on Wednesday and like most charts, open gaps on the bond chart do tend to get filled eventually. However, there is also a gap down near 87.10 that is still open, so which gets filled first?
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. Have a great weekend!
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.
