It was perhaps stronger than an a typical pre-Christmas day of trading on Thursday, and as the market started to dismiss the Omicron headlines, the bears went into hibernation mode for the holidays. The Dow gain nearly 200-points on the day, but as you can see on these small chart below, there was a last minute sell off that took more than 100-points away from the Dow, and 14 off the S&P 500, but the S&P 500 did make a new closing high. That could a little worrisome heading into the new week, but when trading volume is very light like it was on Friday, it could have been just one or two big traders moving things. Bonds were down as risk on was the theme of the week - after Monday.
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The S&P 500 / C-fund closed at a new all time high on Thursday, but that late sell off gave it a bit of a negative kangaroo tail, similar to the failed breakouts that we saw a couple of times over the last month. The overall formation of the inverted head and shoulders with a successful test of the head, looks very promising, but this area has been a tough area to crack for months. The PMO indicator (lower graph) is showing a near positive crossover, which is a bullish sign for the intermediate term, but can be an indication of being overbought in the short-term.
The DWCPF (S-fund) closed above the 200-day EMA for a second straight day, after a big bounce off the recent lows. It could be overbought in the short-term with resistance in the 2210 to 2225 area, but it is the bullish holiday season so perhaps the bears are still sleeping. Any more upside would greatly improve the technical picture of the chart, but let's see it get above 2225 before getting excited.
The EFA (I-fund) rallied moderately on Friday, but the gain was enough to push it above some key resistance. Whether this opens the door to a move back to the old highs remains to be seen, but with the dollar threatening to break down after Thursday's negative reversal day, that is a pretty good possibility.
BND (Bonds / F-fund) was down on Thursday as it continues to dance above and below the 50 and 200 day moving averages. Right now it is just below them. The large open gap near 84.30 is the obvious downside target, but there is some support trying to hold near 84.70.
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 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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We saw bullish holiday action in the final days to end the week, which hasn't been a given in recent years, but the week didn't start out that way as we saw sharp losses on Monday, which probably got people to lean the wrong way as we headed deeper into the holiday week.
According to the calendar, we have a second week of holiday trading coming up because not everyone will be back from vacation, so trading could be even lighter this week, which tends to be more bullish for stocks, but like we saw late on Thursday, the indices can get pushed around more easily.
The Yield on the 10-Year Treasury was up as it tests the 1.5% area again. Any move higher than 1.5% would push it above some resistance and from there it could make a move toward that large overhead open gap, which would not be good news for the F-fund if it happens.
The dollar opened higher but slipped lower all day on Thursday, and by the close it created a negative outside reversal day. Being the holiday I don't know how much we can trust that, but if it wasn't a holiday, I might be predicting that the top is in for the dollar for a while.
The action in the Dow Transportation Index is worth noting since it tends to be one of the market leaders. We had a new closing high on the S&P 500 on Thursday, but you can see that the Transports, which had that explosive blow off top a couple of month ago, is only now testing some descending resistance. two sell offs held at the 100-day average and it is now back above the 50-day average, so the bulls have something going on here, but there is more work to be done. This chart actually looks a lot like the chart of oil which, at about $74, is at some resistance itself but if it can just get a little past that, we might see another big push higher in both oil and the Transports in the coming days.
I showed these two charts earlier in the month, and they don't quite jive. The top one is the average returns and times positive of the S&P 500 for 62 years between 1950 and 2011. From this data we'd presume that the bulls have no problems between Christmas and New Years. The one below is the averages by date over the last 30 years, and in this one 2012 - 2020 is included and it is telling a slightly different story.
Chart provided courtesy of [url]www.sentimentrader.com
[/URL]
Over the last 30 years the S&P 500 has actually been down more often than up on the 29th, 30th, and 31st of December, while the 27th and 28th faired a lot better as far as being up more than 50% of the time, but the 28th has a negative average return.
Most of the meaningful tax selling has been done at this point and what happens this week should have more to with how people want to be positioned going into the New Year. Most of the larger money managers have likely done this already so trading volume will be light again, barring any unforeseen event.
The stock market is open this coming Friday. It hasn't posted on tsp.gov but I assume the TSP will be closed for the holiday, so no transaction would be processed on Friday. That means you must decide by Thursday morning, where you want to have your money to start the New Year. If that's not the case I will update this once the TSP lets us know.
According to the calendar, we have a second week of holiday trading coming up because not everyone will be back from vacation, so trading could be even lighter this week, which tends to be more bullish for stocks, but like we saw late on Thursday, the indices can get pushed around more easily.
The Yield on the 10-Year Treasury was up as it tests the 1.5% area again. Any move higher than 1.5% would push it above some resistance and from there it could make a move toward that large overhead open gap, which would not be good news for the F-fund if it happens.
The dollar opened higher but slipped lower all day on Thursday, and by the close it created a negative outside reversal day. Being the holiday I don't know how much we can trust that, but if it wasn't a holiday, I might be predicting that the top is in for the dollar for a while.
The action in the Dow Transportation Index is worth noting since it tends to be one of the market leaders. We had a new closing high on the S&P 500 on Thursday, but you can see that the Transports, which had that explosive blow off top a couple of month ago, is only now testing some descending resistance. two sell offs held at the 100-day average and it is now back above the 50-day average, so the bulls have something going on here, but there is more work to be done. This chart actually looks a lot like the chart of oil which, at about $74, is at some resistance itself but if it can just get a little past that, we might see another big push higher in both oil and the Transports in the coming days.
I showed these two charts earlier in the month, and they don't quite jive. The top one is the average returns and times positive of the S&P 500 for 62 years between 1950 and 2011. From this data we'd presume that the bulls have no problems between Christmas and New Years. The one below is the averages by date over the last 30 years, and in this one 2012 - 2020 is included and it is telling a slightly different story.
Chart provided courtesy of [url]www.sentimentrader.com
[/URL]
Over the last 30 years the S&P 500 has actually been down more often than up on the 29th, 30th, and 31st of December, while the 27th and 28th faired a lot better as far as being up more than 50% of the time, but the 28th has a negative average return.
Most of the meaningful tax selling has been done at this point and what happens this week should have more to with how people want to be positioned going into the New Year. Most of the larger money managers have likely done this already so trading volume will be light again, barring any unforeseen event.
The stock market is open this coming Friday. It hasn't posted on tsp.gov but I assume the TSP will be closed for the holiday, so no transaction would be processed on Friday. That means you must decide by Thursday morning, where you want to have your money to start the New Year. If that's not the case I will update this once the TSP lets us know.
The S&P 500 / C-fund closed at a new all time high on Thursday, but that late sell off gave it a bit of a negative kangaroo tail, similar to the failed breakouts that we saw a couple of times over the last month. The overall formation of the inverted head and shoulders with a successful test of the head, looks very promising, but this area has been a tough area to crack for months. The PMO indicator (lower graph) is showing a near positive crossover, which is a bullish sign for the intermediate term, but can be an indication of being overbought in the short-term.
The DWCPF (S-fund) closed above the 200-day EMA for a second straight day, after a big bounce off the recent lows. It could be overbought in the short-term with resistance in the 2210 to 2225 area, but it is the bullish holiday season so perhaps the bears are still sleeping. Any more upside would greatly improve the technical picture of the chart, but let's see it get above 2225 before getting excited.
The EFA (I-fund) rallied moderately on Friday, but the gain was enough to push it above some key resistance. Whether this opens the door to a move back to the old highs remains to be seen, but with the dollar threatening to break down after Thursday's negative reversal day, that is a pretty good possibility.
BND (Bonds / F-fund) was down on Thursday as it continues to dance above and below the 50 and 200 day moving averages. Right now it is just below them. The large open gap near 84.30 is the obvious downside target, but there is some support trying to hold near 84.70.
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 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.
