Stocks rallied out of the gate on Tuesday, then we saw the bears step up and take the morning gains away before things stabilized, and the bulls were then back in business. The Dow ended the day up 168-points, after losing 383 on Monday. The Nasdaq and the small caps led on the day, and yet another decline in the dollar kept the I-fund in the running.
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The S&P 500 lost 55-points on Monday, and it recovered 26-points of that yesterday. For the S-fund, the DWCPF closed at 1969 on Dec. 31, and yesterday it closed at 1970. That a pretty flat start to the new year, but it took a wild two-day ride to get there.
So while yesterday looked good and Monday poor, I don't think we have a lot to go on looking out further. The fact that the bulls failed to close the indices higher on the first trading day of the year, a day that is historically positive, tells us that there is some tentativeness out there. Yet the bears were unable to capitalize on the weakness either.
The Santa Claus rally is officially over with the second trading day in January being the last day. You can see that historically things settle down a bit as far as the bulls' advantage.
Chart provided courtesy of www.sentimentrader.com
After yesterday, I think we can cross the 2005 comparison chart off our list because the key was a sharp two day sell-off to start the year. Not that stocks can't go straight down again today, but even if that's the case, the comparison is gone.
It's a little murky out there right now with a few important political events pending as of this writing. The polls had not closed in Georgia yet (Tuesday after the bell), and because of that I don't want to go into too much short-term speculation. Not that I have any insight into that because I don't know how the market will actually react. But as we know, the winners of the run offs will determine the majority in the Senate, and that makes a difference to the market. Also, today is the day of the presidential election certification and there's a big political rally in D.C. It could be a market mover, or a yawner, I don't know.
Administrative Notes:
We have an annual subscription sale going on through Friday 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) made a new high on Monday, then tanked to end the day. Yesterday there was an attempt by the bulls to fight back, and they got back almost half of Monday's losses. Being the third trading day in January, the Santa Claus rally is now officially over. The chart remains in a long F-flag, which can be vulnerable, but the 20-day EMA has so far held during this week's pullback.
The DWCPF (small caps / S-fund) rallied back to regain Monday's losses. It held at the 20-day EMA, but is still below the broken trading channel. In a strong market you'd expect the 20-day EMA to at least try to hold, but sometimes the bounce off it is just a knee-jerk reaction from the bulls, so we'll see if the bears are ready to sell rallies yet.
The EFA (I-fund) had a good day yesterday. It didn't quite make it back to Monday's highs, but it held within that trading channel that only failed briefly last month.
The dollar's weakness is a bullish catalyst for the I-fund and you can see how powerful the trend is to the downside. It could be due for some relief, and the question is whether stocks will pullback if that happens. There's a lot of overly stretched charts out there.
The price of oil rallied almost 5% yesterday, again the dollar has a lot to do with this rally, but yesterday's gain had more to do with Saudi Arabia unexpectedly cutting production. However, the chart is hitting some overhead resistance that has held since March.
BND (Bonds / F-fund) had a bad day as yields moved higher. It remains below some key resistance, which it had briefly broken above last week, but that turned into a failed breakout. It held at some rising support so the bulls did do some bond buying on the dip.
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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The S&P 500 lost 55-points on Monday, and it recovered 26-points of that yesterday. For the S-fund, the DWCPF closed at 1969 on Dec. 31, and yesterday it closed at 1970. That a pretty flat start to the new year, but it took a wild two-day ride to get there.
So while yesterday looked good and Monday poor, I don't think we have a lot to go on looking out further. The fact that the bulls failed to close the indices higher on the first trading day of the year, a day that is historically positive, tells us that there is some tentativeness out there. Yet the bears were unable to capitalize on the weakness either.
The Santa Claus rally is officially over with the second trading day in January being the last day. You can see that historically things settle down a bit as far as the bulls' advantage.
Chart provided courtesy of www.sentimentrader.com
After yesterday, I think we can cross the 2005 comparison chart off our list because the key was a sharp two day sell-off to start the year. Not that stocks can't go straight down again today, but even if that's the case, the comparison is gone.
It's a little murky out there right now with a few important political events pending as of this writing. The polls had not closed in Georgia yet (Tuesday after the bell), and because of that I don't want to go into too much short-term speculation. Not that I have any insight into that because I don't know how the market will actually react. But as we know, the winners of the run offs will determine the majority in the Senate, and that makes a difference to the market. Also, today is the day of the presidential election certification and there's a big political rally in D.C. It could be a market mover, or a yawner, I don't know.
Administrative Notes:
We have an annual subscription sale going on through Friday 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) made a new high on Monday, then tanked to end the day. Yesterday there was an attempt by the bulls to fight back, and they got back almost half of Monday's losses. Being the third trading day in January, the Santa Claus rally is now officially over. The chart remains in a long F-flag, which can be vulnerable, but the 20-day EMA has so far held during this week's pullback.
The DWCPF (small caps / S-fund) rallied back to regain Monday's losses. It held at the 20-day EMA, but is still below the broken trading channel. In a strong market you'd expect the 20-day EMA to at least try to hold, but sometimes the bounce off it is just a knee-jerk reaction from the bulls, so we'll see if the bears are ready to sell rallies yet.
The EFA (I-fund) had a good day yesterday. It didn't quite make it back to Monday's highs, but it held within that trading channel that only failed briefly last month.
The dollar's weakness is a bullish catalyst for the I-fund and you can see how powerful the trend is to the downside. It could be due for some relief, and the question is whether stocks will pullback if that happens. There's a lot of overly stretched charts out there.
The price of oil rallied almost 5% yesterday, again the dollar has a lot to do with this rally, but yesterday's gain had more to do with Saudi Arabia unexpectedly cutting production. However, the chart is hitting some overhead resistance that has held since March.
BND (Bonds / F-fund) had a bad day as yields moved higher. It remains below some key resistance, which it had briefly broken above last week, but that turned into a failed breakout. It held at some rising support so the bulls did do some bond buying on the dip.
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.
