August continues to shine
I will spare you this weekend as this will be a vacation shorten Wrap Up.
Stocks continued their August rally as the indices defy gravity and cling to overhead resistance.
Here are the TSP fund returns for the week of August 13 through August 17.
The S&P 500 broke above the normally bearish rising wedge. This can be looked at two ways: A sign of strength where the old resistance could act as support. Or a fake-out as we see occasionally with wedge / triangle patterns. I always like to use the 3 to 5 day rule after a breakout / break down. That is, don't completely trust it unless it can sustain above the breakout for at least 3 days.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The CBOE put/call ratio is considered a "dumb money" indicator and at extreme readings can be considered a contrarian sign. This reading of 0.82 on this 10-day moving average is quite high as the dumb money has been very bullish.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
This is certainly not a perfect indicator, and more so around the end / beginning of new years, but when this dumb money gets this bullish, there is a tendency to see a pullback. What makes the current reading so interesting is how explosive the bullishness came on here. The indicator has gone almost straight up since late May. Perhaps the election has something to do with the behavior?
Good luck, and thanks for reading. We will be back here next week with another TSP Wrap Up.
Tom Crowley
www.tsptalk.com
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The legal stuff:
This information is for educational purposes only! This is not advice or are commendation. 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.
