It was an easy one for the bulls yesterday as stocks opened higher, drifted up for most of the day before a little selling into the closing bell. The Dow gained 159-points with the gains broad across most indices so the market keeps partying like its 1999. But is that a good thing?
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With stocks ending 2023 on fire after a two month rally off the late October lows, the charts are looking a bit like the chart of late 1999. Are you old enough to remember those days? There was some volatility in the late 90's but for the most part the dot com bubble was inflating rapidly and big tech stocks were flying high.
The Nasdaq is in the midst of a weekly winning streak right now that hadn't happened since that late 1999. It may have been a little different back then with the game changing access to the internet restructuring the economy with new business and millionaires springing up almost everyday. We also had the new century coming when the year digits went from '99 to '00 screwing up computer programs, and that triggered massive tech buying in the late 1990's.
We do have AI now, and perhaps that is the 2020's game changer as we are fairly early in its development, but then again there are many who think it will become the downfall of civilization. But I digress.
Getting back to 1999, the strong rally from October to December was one to remember. Conveniently back then, there were also a couple of pullbacks, one in November and one in December, that helped market timers jump on dips, something we haven't seen during the current two month rally. But something happened back then and its started in the first couple of trading days in January of 2000.
There was dramatic two day drop that changed the tone, although it didn't initially kill enthusiasm. Stocks rallied back a couple of times and made a new high in April, but that was the dot com peak.
I'm not saying that is what is going to happen this time. It's just that a strong stock market, at any given time, does not tell us what is coming around the corner. It is what it is while it's happening. The rest is speculation, which is what we all like to do.
Surely bond yields were not going down in 2000 because stocks go up when bond yields come down, right? Well, in January of 2000 the 10-year Yield peaked and started a steady decline for years.
So yes, the Fed may cut rates in 2024, and the bond market has seen yields falling in anticipation, but that's not necessarily a good thing. It sure wasn't in 2000.
That's all. Just having some fun with the outlier action and what happened the last time we saw something this extreme. Past performance is not in indication of future results. History doesn't always repeat itself but sometimes it rhymes.
I will be checking in every day, but I don't know who is paying attention this week so I'll probably keep things brief unless something meaningful happens.
Are you on the TSP Talk Autotracker? If not, now is the time to get in for 2024! More information: TSP Talk - Get Started in the TSP Talk AutoTracker
The S&P 500 (C-fund) is in rally mode, and has been since October. No matter how you slice it however, charts or indicators, it's hitting extremes and getting dangerous.
DWCPF (S-fund) is similar, but if small caps have something more provocative to say, it's that they were beaten down far more than the S&P 500, so there's a lot more room above before hitting their all time highs. In the case of the Russell 2000 small cap index, it's about 20% off those old 2021 highs.
EFA (I-fund) looks unstoppable. It isn't. It's just a matter of when.
BND (Bonds / F-fund) is also hanging near recent highs and is failing to do any pulling back. How long? With the Fed potentially cutting rates in 2024 yields may go lower (bond prices higher), but a lot of that is already priced in. Yields could fall if there are signs of a recession, which would send this even higher, but some backing and filling is still a reasonable expectation.
Thanks so much for reading! We'll see you back here tomorrow.
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
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With stocks ending 2023 on fire after a two month rally off the late October lows, the charts are looking a bit like the chart of late 1999. Are you old enough to remember those days? There was some volatility in the late 90's but for the most part the dot com bubble was inflating rapidly and big tech stocks were flying high.
The Nasdaq is in the midst of a weekly winning streak right now that hadn't happened since that late 1999. It may have been a little different back then with the game changing access to the internet restructuring the economy with new business and millionaires springing up almost everyday. We also had the new century coming when the year digits went from '99 to '00 screwing up computer programs, and that triggered massive tech buying in the late 1990's.
We do have AI now, and perhaps that is the 2020's game changer as we are fairly early in its development, but then again there are many who think it will become the downfall of civilization. But I digress.
Getting back to 1999, the strong rally from October to December was one to remember. Conveniently back then, there were also a couple of pullbacks, one in November and one in December, that helped market timers jump on dips, something we haven't seen during the current two month rally. But something happened back then and its started in the first couple of trading days in January of 2000.
There was dramatic two day drop that changed the tone, although it didn't initially kill enthusiasm. Stocks rallied back a couple of times and made a new high in April, but that was the dot com peak.
I'm not saying that is what is going to happen this time. It's just that a strong stock market, at any given time, does not tell us what is coming around the corner. It is what it is while it's happening. The rest is speculation, which is what we all like to do.
Surely bond yields were not going down in 2000 because stocks go up when bond yields come down, right? Well, in January of 2000 the 10-year Yield peaked and started a steady decline for years.
So yes, the Fed may cut rates in 2024, and the bond market has seen yields falling in anticipation, but that's not necessarily a good thing. It sure wasn't in 2000.
That's all. Just having some fun with the outlier action and what happened the last time we saw something this extreme. Past performance is not in indication of future results. History doesn't always repeat itself but sometimes it rhymes.
I will be checking in every day, but I don't know who is paying attention this week so I'll probably keep things brief unless something meaningful happens.
Are you on the TSP Talk Autotracker? If not, now is the time to get in for 2024! More information: TSP Talk - Get Started in the TSP Talk AutoTracker
The S&P 500 (C-fund) is in rally mode, and has been since October. No matter how you slice it however, charts or indicators, it's hitting extremes and getting dangerous.
DWCPF (S-fund) is similar, but if small caps have something more provocative to say, it's that they were beaten down far more than the S&P 500, so there's a lot more room above before hitting their all time highs. In the case of the Russell 2000 small cap index, it's about 20% off those old 2021 highs.
EFA (I-fund) looks unstoppable. It isn't. It's just a matter of when.
BND (Bonds / F-fund) is also hanging near recent highs and is failing to do any pulling back. How long? With the Fed potentially cutting rates in 2024 yields may go lower (bond prices higher), but a lot of that is already priced in. Yields could fall if there are signs of a recession, which would send this even higher, but some backing and filling is still a reasonable expectation.
Thanks so much for reading! We'll see you back here tomorrow.
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.
