TSP Talk: The bulls have left the buiding

Yes Virginia, there is no Santa Claus rally. Not yet anyway, and time is running out quickly. For years and years stocks had done well during either one, or both weeks surrounding Christmas, but so far that hasn't happened. And it's not just because we are in a bear market because I've shown a few examples of stocks doing very well at the end of December during bear market years. So unless something changes in the coming two to four trading days, it looks like it could actually be a rare "it's different this time" situation.

[TABLE="align: center"]
[TR]
[TD="align: center"]
tsp_122922.gif
[/TD]
[TD]
[/TD]
[TD="width: 338, align: center"] Daily TSP Funds Return
tsp_fund_returns_122922.gif
[TABLE="align: center"]
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
With the 2-day settlement rule for stocks, yesterday may have been the last legitimate chance to do some tax selling, and in a year as poor as 2022 was, that could be a lot of deductions for traders. Not to get too in the weeds, but small traders can only deduct so much to offset gains, so that may not be an issue, but larger traders and firms who use mark to market rules can take big losses for their businesses to avoid taxes this year, or even take a loss and get refunds. It is an incentive sell in down years.

The headlines yesterday were talking about Covid again and perhaps we saw a lot of snap judgment selling with memories of early 2020 still in investors heads? With trading volume still quite low, and we really have had a high volume capitulation bottom yet, there is probably more downside to go in the coming weeks or months, but low volume can also work the other way on a positive headline this week, which we haven't had in a while. We do get the weekly initial jobless claims this morning before the opening bell so we'll see what that brings.

Despite the light trading volume, the declining stocks and share volume outnumbered the advancing by a long shot. I spent weeks talking about how the bears usually take time off during this week and we're only left with pension and 401K deposits, but again 2022 has not been a normal year.
tsp_122922t.gif



The 10-year Yield opened lower and then moved higher to keep that rally going, and that put pressure on stocks. Why yields would go up when we're starting to see some Covid panic again doesn't make a lot of sense, and if we have a recession next year as many suspect, this will turn out to be a temporary rally. But this chart seems to want to retrace some of that large negative candlestick from November before rolling over again.

tsp_122922u.gif


The dollar opened lower but then, like yields, climbed during the day to close nears the highs adding more to the downside in stocks, but it is up against some resistance in the 200-day averages so we'll see if that can hold it down.


It seems like sentiment has gotten bearish enough that the selling would be close to being over done, but just in the last two days I see a chart that probably scars me the most. The High Yield Corporate Bonds tell us the condition of the credit market and as long as this holds up, stocks tend to hang in there, but look what we have here.

tsp_122922v.gif



Today is the 29th and we've gone beyond the strongest seasonal period for stocks surrounding the holidays, so I can see why hope is fading. It doesn't look as if Santa is going to make an appearance, unless he can sneak in here in the next few days, which may not be out of the question since end of year / beginning of year reversals are not uncommon.

tsp_122122v.gif

Chart provided courtesy of www.sentimentrader.com


Holiday Closing info from tsp.gov:
"Some financial markets will be closed on Monday, January 2 in observance of the New Year's Day holiday. The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (January 2) will be processed Tuesday night (January 3), at Tuesday's closing share prices."


Admin Note: Don't forget to login to the TSP Talk AutoTracker if you haven't for a while. Accounts that have been idle for too long won't rollover into the New Year. I'll remind everyone again during the week before New Year's but in case you won't be around, here is your reminder. If you are not already on the AutoTracker, this is a good time to start so that we track your full year in 2023. It's free. More info on creating a new account: AutoTracker - How to get started





The S&P 500 (C-fund) moved lower yesterday and it is now testing last week's lows. There is that "stealth gap" still open down near 3750 that may be looking to get filled. While the charts and some indicators are deteriorating, so is investor sentiment which usually means some kind of relief rally could be brewing. Ideally for the bulls they will see some kind of negative action today to fill that gap, preferably but not likely on high volume, and then a reversal back up to end the year. For the bears, they have been doing a fine job of turning the bear market rally, and the charts, into rubbish again.

tsp_c_fund_122922.gif



The DWCPF (S-fund) has fallen through the recent lows and that doesn't leave much support down to the October lows. Can we have a rally surrounding the New Year's holiday? Sure, but the bears won't be far off and ready to sell it again, so be careful.

tsp_s_fund_122922.gif



The EFA / I-fund has been leading and even yesterday's losses outperformed the C and S-funds yet again. There is some important support in the 64.50 area where the 200-day EMA meets the bottom of a small open gap. The 50-day EMA is just below that so we'll have to see if the bears can take down this recent leader.

tsp_i_fund_122922.gif



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

To get weekly or daily notifications when we post new commentary, sign up HERE.

Thanks so much 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.
 
Back
Top