The absurdity of Wednesday's sell off was reiterated yesterday with an immediate bounce-back yesterday as the dip buyers couldn't stand staying idle. The Dow gained 323-points yesterday with 1% plus gains in many of the indices while bond yields were up, but the dollar was down. We are past the point of investors being underinvested so profit taking is possible at this point, but can it happen during the seasonal Santa Claus rally period, which basically starts today and runs through the first couple of trading days in January.
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For those of you who have read these market commentaries over the years, you know paranoia is part of my make up when it comes to the market, so when we get a dramatic, swift sell off like we saw on Wednesday, I have to think there was something to it, whether it was a big trader pulling the plug, leaked data, or something more nefarious. The selling even came too late for TSP'ers react meaning, if anyone has been waiting for a chance to buy a dip, you didn't get a chance during that plunge since it happened after the TSP deadline on Wednesday, and it was bouncing back already on Thursday.
I don't know if you recall the flash crash of 2010, but it was a headliner. It turned out to be something nefarious caused by a single trader in Europe but it took a while to figure it out. Also, the decline was a lot more dramatic than the two hour dive the other day.
It happened on May 6, 2010 and it lasted only 36 minutes, but it took the indices down about 9% before rebounding back, and the 9% loss was cut down to 3% by the close as buyers stepped up, not only minutes after the crash, but for a few days afterward and the entire 9% loss was recovered in two days.
But it wasn't that simple. The S&P then rallied even higher over the next 2 or 3 days, but then something weird happened. The S&P rolled back over and not only tested the lows of that 9% decline -- but it went even lower, and didn't bottom for two more months.
So, without speculating about this week's quick decline was all about or what it meant, I will say that we may not have felt the full effects yet of that two hour drop.
The yield on the 10-year Treasury Note was up yesterday so the market has basically got off of the "yields up, stocks down" trend, but stocks do seem to be continuing to counter the moves in the dollar, which was back down after Wednesday's big rally.
Both charts remain in strong downtrends and that could keep the stock market rally going, unless we get some kind of holiday reversal thrown at us.
Other than that, I see nothing in the way of this rally especially if Santa Claus comes to town next week, but again, the paranoid in me says don't put your guard down and keep open the possibility of the unexpected, and that could include delayed ramifications from the mini flash crash on Wednesday.
Nike was down almost 10% after hours yesterday after reporting earnings and being a Dow component, it could weigh of the DJIA today.
We will get the PCE Prices report this morning, as well as the Personal Spending and Income reports, which could be a market mover if it misses the mark.
Have a great holiday weekend, enjoy your holidays, and Merry Christmas!
The S&P 500 (C-fund) took a dive on Wednesday but that double layer of support has held so far as investors brushed off the weird sell off. As I mentioned above, sometimes a one day wonder move turns out to be more than what it appears to be at first, so watch for a possible move to at least test Wednesday's lows at some point, but given the time of year, it may not happen right away.
DWCPF (S-fund) continues to have moves of 1% to 2% almost daily. So far the open gap created post Fed meeting is still open, and the churning above it is starting to look like a set up for one of those island reversals, but we'd have to see a gap down to about 1900 for that to happen. Probably a long shot, but if it happens it would be a very bearish sign.
EFA (I-fund) got a boost from the dollar's weakness yesterday and here it is again above that prior high after a couple of failed breakouts. That's on the unusual side because resistance, once broken, tends to act as support, but this has been bobbing and weaving above and below that line for a week or so. The "F" flag, which usually eventually break down, did the unexpected and broke to the upside.
BND (Bonds / F-fund) was flat after a morning rally failed to hold. Nothing serious as this chart continues to drift higher. Like stocks, I'd like to get on the bond bandwagon, but it just isn't giving out opportunities.
Thanks so much for reading! Merry Christmas and Happy Holidays! We'll see you on Tuesday.
Tom Crowley
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
Daily Market Commentary Archives
To get weekly or daily notifications when we post new commentary, sign up HERE.
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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[TD="width: 338, align: center"] Daily TSP Funds Return
[TR]
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[/TR]
[/TABLE]
[/TD]
[/TR]
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For those of you who have read these market commentaries over the years, you know paranoia is part of my make up when it comes to the market, so when we get a dramatic, swift sell off like we saw on Wednesday, I have to think there was something to it, whether it was a big trader pulling the plug, leaked data, or something more nefarious. The selling even came too late for TSP'ers react meaning, if anyone has been waiting for a chance to buy a dip, you didn't get a chance during that plunge since it happened after the TSP deadline on Wednesday, and it was bouncing back already on Thursday.
I don't know if you recall the flash crash of 2010, but it was a headliner. It turned out to be something nefarious caused by a single trader in Europe but it took a while to figure it out. Also, the decline was a lot more dramatic than the two hour dive the other day.
It happened on May 6, 2010 and it lasted only 36 minutes, but it took the indices down about 9% before rebounding back, and the 9% loss was cut down to 3% by the close as buyers stepped up, not only minutes after the crash, but for a few days afterward and the entire 9% loss was recovered in two days.
But it wasn't that simple. The S&P then rallied even higher over the next 2 or 3 days, but then something weird happened. The S&P rolled back over and not only tested the lows of that 9% decline -- but it went even lower, and didn't bottom for two more months.
So, without speculating about this week's quick decline was all about or what it meant, I will say that we may not have felt the full effects yet of that two hour drop.
The yield on the 10-year Treasury Note was up yesterday so the market has basically got off of the "yields up, stocks down" trend, but stocks do seem to be continuing to counter the moves in the dollar, which was back down after Wednesday's big rally.
Both charts remain in strong downtrends and that could keep the stock market rally going, unless we get some kind of holiday reversal thrown at us.
Other than that, I see nothing in the way of this rally especially if Santa Claus comes to town next week, but again, the paranoid in me says don't put your guard down and keep open the possibility of the unexpected, and that could include delayed ramifications from the mini flash crash on Wednesday.
Nike was down almost 10% after hours yesterday after reporting earnings and being a Dow component, it could weigh of the DJIA today.
We will get the PCE Prices report this morning, as well as the Personal Spending and Income reports, which could be a market mover if it misses the mark.
Have a great holiday weekend, enjoy your holidays, and Merry Christmas!
The S&P 500 (C-fund) took a dive on Wednesday but that double layer of support has held so far as investors brushed off the weird sell off. As I mentioned above, sometimes a one day wonder move turns out to be more than what it appears to be at first, so watch for a possible move to at least test Wednesday's lows at some point, but given the time of year, it may not happen right away.
DWCPF (S-fund) continues to have moves of 1% to 2% almost daily. So far the open gap created post Fed meeting is still open, and the churning above it is starting to look like a set up for one of those island reversals, but we'd have to see a gap down to about 1900 for that to happen. Probably a long shot, but if it happens it would be a very bearish sign.
EFA (I-fund) got a boost from the dollar's weakness yesterday and here it is again above that prior high after a couple of failed breakouts. That's on the unusual side because resistance, once broken, tends to act as support, but this has been bobbing and weaving above and below that line for a week or so. The "F" flag, which usually eventually break down, did the unexpected and broke to the upside.
BND (Bonds / F-fund) was flat after a morning rally failed to hold. Nothing serious as this chart continues to drift higher. Like stocks, I'd like to get on the bond bandwagon, but it just isn't giving out opportunities.
Thanks so much for reading! Merry Christmas and Happy Holidays! We'll see you on Tuesday.
Tom Crowley
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
Daily Market Commentary Archives
To get weekly or daily notifications when we post new commentary, sign up HERE.
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.
