There was some tentativeness at the open yesterday as investors worried if Tuesday's big rally was going was going flop over as we have seen before, and since that Thanksgiving Friday massacre. But it didn't take long before stocks caught a bid, and from there the indices were off to the races again - closing at the highs of the day. The Dow gained 261, with gains over 1% in the Nasdaq and S&P 500. The I-fund also did well as the dollar took a hit yesterday. Small caps lagged with a 0.73% gain, but Tuesday's 3% gain in that fund was a hard act to follow.
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The S&P 500 / C-fund tacked on another 1% yesterday, keeping the rebound off of Monday's positive reversal alive. We talked about the successful head test on the inverted head and shoulders pattern yesterday, and now everything seems to be in place for an imminent breakout, but can we trust the action during this low volume trading surrounding the holidays?
The DWCPF (S-fund) also managed to add onto the 3% gain it had on Tuesday, so that's a 5% move off the low on Monday. We saw a similar sized rally in early December that stalled after three days, so moving up from here would go a long way in letting us know that the result won't be the same, which wasn't very good.
The EFA (I-fund) managed to poke its head above the 50-day EMA and the descending resistance line. Like the small caps, a little more upside would improve the chart quite a bit.
BND (Bonds / F-fund) was up as yield dipped. I keep eying that big open gap near 84.55 as the eventual target so it's hard to get too bullish on bonds for me.
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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As I often talk about, the big money folks are always trying to get people to lean the wrong way so that they can take advantage of overreactions, which they did big time on Monday when the small caps were down 2%. They were probably buying into that sell off, positioning themselves for this week's rally while they, and professional traders, take time off this week as they don't like the low volume trading activity around the holiday. So the bulls have taken charge, but that could change next week as the big money may start to reposition themselves for the start of 2022. We'll know more next week which way they are trying to get us to lean.
Internally it was quite positive again on Wednesday with 3 to 1 advancers over decliners on the NYSE issues and share volume, and about 2 to 1 on the Nasdaq volume. One black eye on this chart is the 137 new lows on the Nasdaq, so there are some sectors that are not participating in this rally.
The dollar was down sharply but landed on some possible support. If that fails to hold it could be trouble, but there is one caveat here, and that is if this is just a pre-holiday reversal, that with reverse back after the holidays?
The weakness in the dollar gave a boost to commodities like oil, gold, silver, and we can include bitcoin. That fake out to the downside in oil broke that bull flag, but that has been reversed and it appears to be breaking to the upside as we'd expect from a bull flag.
I mentioned the pre-holiday reversal on the dollar, but is this actually occurring in many of the charts including the stock market? The week between Christmas and New Years is historically the strongest week of the year, but that has actually diminished in recent years, as is often the case when everyone is onto a trend. So whether next week reverses back, or the holiday trading continues will be the question, and of course that sets up the possibility of a post holiday (January) reversal back down.
I'm not calling for that because it will depend how it sets up over the next week. Early January has a good record historically, but there is one interesting trend that suggests if 2022 is going to be a down year for stocks, we could see some indication of that in the first week of the New Year. It's the "as goes January, so goes the year" theory.
This is a shout out to Mike who runs our Intrepid Timer service. He had surgery on Wednesday and I wanted to wish him a speedy recovery. As he told his subscribers, he won't be posting a commentary on Thursday, but Wednesday's commentary did outline his plan of action. He'll be back on Monday.
The stock market and the TSP will be closed on Friday observing the Christmas holiday. I misspoke yesterday when I said "That leaves just six trading days left in the year." Apparently there is not a New Years stock market holiday on December 31 this year. Although I do assume the TSP will be closed making it a little tougher for us on Thursday the 30th to decide where to have our money to start the New Year.
Internally it was quite positive again on Wednesday with 3 to 1 advancers over decliners on the NYSE issues and share volume, and about 2 to 1 on the Nasdaq volume. One black eye on this chart is the 137 new lows on the Nasdaq, so there are some sectors that are not participating in this rally.
The dollar was down sharply but landed on some possible support. If that fails to hold it could be trouble, but there is one caveat here, and that is if this is just a pre-holiday reversal, that with reverse back after the holidays?
The weakness in the dollar gave a boost to commodities like oil, gold, silver, and we can include bitcoin. That fake out to the downside in oil broke that bull flag, but that has been reversed and it appears to be breaking to the upside as we'd expect from a bull flag.
I mentioned the pre-holiday reversal on the dollar, but is this actually occurring in many of the charts including the stock market? The week between Christmas and New Years is historically the strongest week of the year, but that has actually diminished in recent years, as is often the case when everyone is onto a trend. So whether next week reverses back, or the holiday trading continues will be the question, and of course that sets up the possibility of a post holiday (January) reversal back down.
I'm not calling for that because it will depend how it sets up over the next week. Early January has a good record historically, but there is one interesting trend that suggests if 2022 is going to be a down year for stocks, we could see some indication of that in the first week of the New Year. It's the "as goes January, so goes the year" theory.
This is a shout out to Mike who runs our Intrepid Timer service. He had surgery on Wednesday and I wanted to wish him a speedy recovery. As he told his subscribers, he won't be posting a commentary on Thursday, but Wednesday's commentary did outline his plan of action. He'll be back on Monday.
The stock market and the TSP will be closed on Friday observing the Christmas holiday. I misspoke yesterday when I said "That leaves just six trading days left in the year." Apparently there is not a New Years stock market holiday on December 31 this year. Although I do assume the TSP will be closed making it a little tougher for us on Thursday the 30th to decide where to have our money to start the New Year.
The S&P 500 / C-fund tacked on another 1% yesterday, keeping the rebound off of Monday's positive reversal alive. We talked about the successful head test on the inverted head and shoulders pattern yesterday, and now everything seems to be in place for an imminent breakout, but can we trust the action during this low volume trading surrounding the holidays?
The DWCPF (S-fund) also managed to add onto the 3% gain it had on Tuesday, so that's a 5% move off the low on Monday. We saw a similar sized rally in early December that stalled after three days, so moving up from here would go a long way in letting us know that the result won't be the same, which wasn't very good.
The EFA (I-fund) managed to poke its head above the 50-day EMA and the descending resistance line. Like the small caps, a little more upside would improve the chart quite a bit.
BND (Bonds / F-fund) was up as yield dipped. I keep eying that big open gap near 84.55 as the eventual target so it's hard to get too bullish on bonds for me.
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
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Thanks for reading. Have a Merry Christmas, and a happy holiday to all of our TSP Talk family! We'll see you back here on Monday.
Tom Crowley
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 for reading. Have a Merry Christmas, and a happy holiday to all of our TSP Talk family! We'll see you back here on Monday.
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.
