Stocks rallied on Friday, and if I had posted my Friday commentary and reports timely, you would have read why that was the prevailing trend. Stocks, bonds, gold, silver, and a whole lot more, were all up on Friday, partially because the dollar has finally been moving off its recent highs. It's a decent set up for December, but have stocks come too far, too fast recently?
The holidays got in the way of work on Friday as I didn't realize I hadn't uploaded the Commentary or my Plus report until some folks nudged me to let me know they weren't there. Ugh! Sorry about that. I did eventually get them posted but probably too late.
If you checked and it wasn't there, all you really missed was that I said the Friday after Thanksgiving had a very bullish record if the Wednesday before Thanksgiving was down, and it did turn out to be a nice positive day, although the rally did lose steam and stocks closed off their highs by that early 1 PM ET closing bell.
I'm not complaining, but if anyone was doing some selling on Friday morning, you did get some profits taken away from you in those final minutes of trading on Friday.
The C-fund, and particularly the S-fund, had big gains for the month of November while the I-fund managed to only close flat because of the continued rally in the dollar.
The decreasing Fed Balance Sheet is not the worst thing that could happen to the US economy, but it is a big reason why the dollar has been strengthening, causing the havoc in the I-fund since the balance sheet's peak in April of 2023..
OK, on to December:
Here is something I posted a while back about the bullish record for stocks in the final 6 trading days in November through the first three in December. So how did the last 6 days in November do? ...
Not bad at all. The C, S, and I-funds were up 1.99%, 4.22%, and 1.73% respectively.
This 30-year December seasonality chart shows some green in early December but the percentage of times positive (blue line) isn't too much better than 50/50. The middle of December that has more of a dubious record.
Chart provided courtesy of www.sentimentrader.com
I don't have the numbers, but from experience I noticed that when stocks are up big for the year heading into December, many money managers are scrambling for gains to try to catch up to the indices, so the action tends to be quite good. Also, there are plenty of gains in 2024 and that means profit taking may be put off until January to avoid 2024 taxes.
Should stocks be doing this good? Is the environment for stocks still bullish? Are things too stretched, etc? Maybe. But that stuff tends not to matter in bullish years, until we get into the new year. If stocks are down or flat heading into December, that's when it's time to be careful in December.
Of course there are no guarantees. I am not saying stocks will be up in December, just that history suggests they have the wind at their backs this year - as cringey as that might feel at the nosebleed levels.
The S&P 500 (C-fund) broke out to a new high on Friday. It is in the middle of a trading channel with room above and below, but there could be some support at the early November high. I am always concerned about a change in direction in stocks when a new month starts, but the seasonality calendar is on the side of the bulls for at least a couple more days.
DWCPF (S-fund) looks a little less appealing with the top of that trading channel just overhead, and the flat top look coming out of last week. Small caps tend to do well in December, but right now it is digesting that big move off the November 19th low. The fact that the bottom of that filled gap has been holding is a good sign that dip buyers are not letting this fall before they jump in. The risk / reward may not be as good right here in the S-fund, but will those dip buyers let this drop? Maybe not.
ACWX was up 0.89% on Friday and thankfully the TSP gave the I-fund a gain of 0.88%, so that's encouraging. With the dollar breaking down last week, this chart is looking a lot better, but the 50-day EMA may pose a problem to any continued relief rally.
You can see the updated I-fund and other TSP share prices and returns posted by about 8:30 PM ET daily here: https://www.tsptalk.com/tsp_share_prices.php
BND (bonds / F-fund) is also off and running since breaking above its resistance. There's open gaps above and below so it really could go either way in the short-term while remaining above that broke resistance.
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
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
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 holidays got in the way of work on Friday as I didn't realize I hadn't uploaded the Commentary or my Plus report until some folks nudged me to let me know they weren't there. Ugh! Sorry about that. I did eventually get them posted but probably too late.
If you checked and it wasn't there, all you really missed was that I said the Friday after Thanksgiving had a very bullish record if the Wednesday before Thanksgiving was down, and it did turn out to be a nice positive day, although the rally did lose steam and stocks closed off their highs by that early 1 PM ET closing bell.
I'm not complaining, but if anyone was doing some selling on Friday morning, you did get some profits taken away from you in those final minutes of trading on Friday.
The C-fund, and particularly the S-fund, had big gains for the month of November while the I-fund managed to only close flat because of the continued rally in the dollar.
The decreasing Fed Balance Sheet is not the worst thing that could happen to the US economy, but it is a big reason why the dollar has been strengthening, causing the havoc in the I-fund since the balance sheet's peak in April of 2023..
OK, on to December:
Here is something I posted a while back about the bullish record for stocks in the final 6 trading days in November through the first three in December. So how did the last 6 days in November do? ...
Not bad at all. The C, S, and I-funds were up 1.99%, 4.22%, and 1.73% respectively.
This 30-year December seasonality chart shows some green in early December but the percentage of times positive (blue line) isn't too much better than 50/50. The middle of December that has more of a dubious record.
Chart provided courtesy of www.sentimentrader.com
I don't have the numbers, but from experience I noticed that when stocks are up big for the year heading into December, many money managers are scrambling for gains to try to catch up to the indices, so the action tends to be quite good. Also, there are plenty of gains in 2024 and that means profit taking may be put off until January to avoid 2024 taxes.
Should stocks be doing this good? Is the environment for stocks still bullish? Are things too stretched, etc? Maybe. But that stuff tends not to matter in bullish years, until we get into the new year. If stocks are down or flat heading into December, that's when it's time to be careful in December.
Of course there are no guarantees. I am not saying stocks will be up in December, just that history suggests they have the wind at their backs this year - as cringey as that might feel at the nosebleed levels.
The S&P 500 (C-fund) broke out to a new high on Friday. It is in the middle of a trading channel with room above and below, but there could be some support at the early November high. I am always concerned about a change in direction in stocks when a new month starts, but the seasonality calendar is on the side of the bulls for at least a couple more days.
DWCPF (S-fund) looks a little less appealing with the top of that trading channel just overhead, and the flat top look coming out of last week. Small caps tend to do well in December, but right now it is digesting that big move off the November 19th low. The fact that the bottom of that filled gap has been holding is a good sign that dip buyers are not letting this fall before they jump in. The risk / reward may not be as good right here in the S-fund, but will those dip buyers let this drop? Maybe not.
ACWX was up 0.89% on Friday and thankfully the TSP gave the I-fund a gain of 0.88%, so that's encouraging. With the dollar breaking down last week, this chart is looking a lot better, but the 50-day EMA may pose a problem to any continued relief rally.
You can see the updated I-fund and other TSP share prices and returns posted by about 8:30 PM ET daily here: https://www.tsptalk.com/tsp_share_prices.php
BND (bonds / F-fund) is also off and running since breaking above its resistance. There's open gaps above and below so it really could go either way in the short-term while remaining above that broke resistance.
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
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
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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