I hope everyone had a nice holiday weekend. Now back to the grind. Stocks rallied on Christmas Eve, as we'd expect on a quiet, light volume half day of trading before a holiday, although there were some pockets of weakness as we've seen investors move money from one sector to another recently, rather than all out buying across the board. The Dow gained 70-points and the S&P and Nasdaq posted moderate gains, but it was the small caps day to lag as the S-fund dipped 0.19%.
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The I-fund held onto a gain despite the dollar rallying on Thursday, and bonds were up during its half day of trading as well.
Being the week between Christmas and New Years, we'd expect continued light volume, quiet trading, but with the budget still pending, and the possibility of a government shutdown, it could give the bears a reason to show and do some trading. We've had near shutdowns, brief shutdowns, but something eventually gets done and life always seems to go on, and I'd expect something to be done this time as well, but we'll see if investors get cranky with stocks already near all time highs and probably priced for perfection.
Year end window dressing normally would keep some positive pressure on stocks this week, but there has been the tremendous rally in recent months and sometimes that has some tax implications. The typical tax selling period is basically done without much of a negative impact at all. That could set up some selling in January to push any tax obligations over into the next year, despite a possible increase in capital gains coming next year - although that may depend on who wins the Georgia senate races.
Update Sunday Night: President Trump signs COVID relief, government funding bill. The futures are rallying, so here comes another possible emotional Monday morning gap opening.
Administrative Note: We're planning another annual subscription sale for our premium services starting in January. As always, 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. I'll send an email reminder at the end of the week.
The S&P 500 (C-fund) had a typical holiday rally. The chart has been slowly riding along the bottom of that trading channel, and that would be a little concerning, except that the big positive reversal day last Monday showed there is still a lot of interest in buying below that support line. I don't know how long that can last, but come January we could see some of these long 2020 trends get shaken up.
The weekly chart of the S&P 500 continues to show us how stretched the index is as it trades near several resistance lines, and has so for several weeks now. I would think at some point this is going to snap back as it has done every other time it has been this high. There is one rising trading channel (orange) that is still intact, but that angle of incline doesn't look very sustainable.
The DWCPF Index / S-fund, although down on Thursday, continues to inch higher, but clearly that narrow rising trading channel, which is looking more and more like a rising wedge, will eventually give way. Most likely to the downside, but that's no guarantee, and we know the strength of this market has been surprising many of us for a long time, so as much as I doubt it, I won't rule out a possible upside breakout.
EFA / I-fund broke down last week after that new strain of COVID was spreading through Europe. It bounced back right away but you can see that the old support line is now holding as resistance, although that line is still rising.
The Dow Transportation Index has been lagging a bit but like the S&P 500, it has been holding onto that rising support line. That is a long trading channel with the one brief breakdown in October in there. Because it is running out of room, this will have to rally early this week if that channel is going to remain intact.
BND (Bonds / F-fund) was up on Thursday and yields were down on the 10-Year Treasury. As we know yields do move counter to bond prices but for some reason both the Bond Price ETF (BND) and the yield on the 10-year seem to be forming a bullish consolidation pattern. So what we're seeing is shorter term bond yields falling, while the longer term (10 and 30 year) are moving higher. That's telling us that there may be some short-term concerns in the economy, but the longer term looks better.
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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The I-fund held onto a gain despite the dollar rallying on Thursday, and bonds were up during its half day of trading as well.
Being the week between Christmas and New Years, we'd expect continued light volume, quiet trading, but with the budget still pending, and the possibility of a government shutdown, it could give the bears a reason to show and do some trading. We've had near shutdowns, brief shutdowns, but something eventually gets done and life always seems to go on, and I'd expect something to be done this time as well, but we'll see if investors get cranky with stocks already near all time highs and probably priced for perfection.
Year end window dressing normally would keep some positive pressure on stocks this week, but there has been the tremendous rally in recent months and sometimes that has some tax implications. The typical tax selling period is basically done without much of a negative impact at all. That could set up some selling in January to push any tax obligations over into the next year, despite a possible increase in capital gains coming next year - although that may depend on who wins the Georgia senate races.
Update Sunday Night: President Trump signs COVID relief, government funding bill. The futures are rallying, so here comes another possible emotional Monday morning gap opening.
Administrative Note: We're planning another annual subscription sale for our premium services starting in January. As always, 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. I'll send an email reminder at the end of the week.
The S&P 500 (C-fund) had a typical holiday rally. The chart has been slowly riding along the bottom of that trading channel, and that would be a little concerning, except that the big positive reversal day last Monday showed there is still a lot of interest in buying below that support line. I don't know how long that can last, but come January we could see some of these long 2020 trends get shaken up.
The weekly chart of the S&P 500 continues to show us how stretched the index is as it trades near several resistance lines, and has so for several weeks now. I would think at some point this is going to snap back as it has done every other time it has been this high. There is one rising trading channel (orange) that is still intact, but that angle of incline doesn't look very sustainable.
The DWCPF Index / S-fund, although down on Thursday, continues to inch higher, but clearly that narrow rising trading channel, which is looking more and more like a rising wedge, will eventually give way. Most likely to the downside, but that's no guarantee, and we know the strength of this market has been surprising many of us for a long time, so as much as I doubt it, I won't rule out a possible upside breakout.
EFA / I-fund broke down last week after that new strain of COVID was spreading through Europe. It bounced back right away but you can see that the old support line is now holding as resistance, although that line is still rising.
The Dow Transportation Index has been lagging a bit but like the S&P 500, it has been holding onto that rising support line. That is a long trading channel with the one brief breakdown in October in there. Because it is running out of room, this will have to rally early this week if that channel is going to remain intact.
BND (Bonds / F-fund) was up on Thursday and yields were down on the 10-Year Treasury. As we know yields do move counter to bond prices but for some reason both the Bond Price ETF (BND) and the yield on the 10-year seem to be forming a bullish consolidation pattern. So what we're seeing is shorter term bond yields falling, while the longer term (10 and 30 year) are moving higher. That's telling us that there may be some short-term concerns in the economy, but the longer term looks better.
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.
