The very large cap stocks and the small caps stocks led the way yesterday. The smaller large caps, and the midcaps weren't quite as impressive. the Nasdaq lagged again being one of the few indices down on the day. The Dow gained another impressive 358-points (+1.3%) and the Russell 2000 small cap index was up 1%. But our C and S funds, large cap and small caps, were up much less so the TSP funds are being a little left behind - particularly in small caps where you would think the S-fund would be shining.
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The S-fund is made up of small and midcap stocks - it is basically an all market index containing approximately 5000 U.S. stocks, minus the 500 stocks that make up the S&P 500. The Russell 2000 has about - you guessed it, 2000 stocks in it, so that means there are in the neighborhood of 2500 other stocks outside of the Russell and S&P 500, in the S-fund. Those are the ones holding the S-fund back recently. It could always change.
We're seeing some kind of rotation over the last several weeks but because the Nasdaq 100 / FAANG stocks refuse to rollover, it may just be a very slow process. At least at first until investors catch on and then it may accelerate. Who knows, but something is happening.
Here is that equal weighted S&P 500 chart which is basically the S&P 500 with all 500 stocks being counted with the same value, rather than by market capitalization as the S&P 500 is. It was up over 1%. So the same 500 stocks, when viewed differently in two different indices, shows one up 1.05% yesterday, and another +0.27%. That's a change from what we're been seeing this year.
That is sort of a good thing because it means the broader market may be stepping up rather than having 5 or 10 huge companies run the show. On the other hand the C-fund is made up of the S&P 500 which rewards those larger tech companies more, so if they lag, the C-fund could lag.
But we may be premature in calling for the death of large tech. Here's the Nasdaq 100 which is a large basket of all of the major tech stocks. We get a couple of down days and we're all talking rotation out of tech. Does this chart look like it is in trouble right now? I'd say, not yet.
Here's the Russell 2000 which is moving in the right direction, but it had been lagging behind until recently. The Nasdaq 100 surpassed its June 8 high about two weeks after its pullback. The S&P 500 passed its June 8 high in mid-July. The Russell 2000 did it last week. So is it just playing catch up temporarily or is this trying to be the new leader? We know small caps can have explosive years.
The S&P 500 (C-fund) continues to climb the wall of worry leaving those small open gaps behind -- for now. They'll likely be revisited at some point, but not yesterday. I expect a lot of turmoil in the political world between now and the election so for those looking for an opportunity to buy, the question is whether the market can continue to climb that wall of worry. We may get some interesting headlines coming out. Will the market care or is it all about the economy recovering?
The year to date chart shows that we have passed the 2019 closing price - meaning the S&P 500 is positive for the year, but those key levels can be turning points. When the S&P dipped to that line in early February, it got a bounce. On the way back up in June it hit that line again and we saw a few weeks of volatility and pullbacks. It crossed back above it in July and now it's getting close to the 2020 high made in mid-February. A double top pullback at that point seems extremely obvious. I can hear the cries of "get me out, I'm even!" But it may be so obvious and expected, that the market could make those folks regret selling. I have no idea, but that's the psychology of hitting that February high which, just 1% away, could happen any day now.
The DWCPF (S-fund) was up 0.08% yesterday while the Russell 2000 was up 1%. That's a tough one for those who chose the small caps fund. You're not being rewarded for calling a rally in small caps. Perhaps just a phase. So far the chart looks OK having broke above a normally bearish rising wedge, but as I motioned before: if you take away that peak in July it would look more like a bullish cup and handle breakout.
The EAFE (I-fund) was up modestly despite another positive day for the dollar. It's still surprising that this fund hasn't outperformed the U.S. funds over the last several weeks given how much the dollar has fallen.
The Dow Transportation Index took it to another level yesterday breaking above the resistance line of its rising trading channel. What's not to like here, except maybe that it has come too far, too fast?
BND (bond ETF / F-fund) followed through yesterday, on Friday's weakness and negative reversal. I think the bond market was surprised at the strength of the jobs report and that sent yields higher. The decline yesterday took it below that long rising channel and support line.
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
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.
[TABLE="align: center"]
[TR]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[TD][/TD]
[TD="align: center"]
[/TR]
[/TABLE]
The S-fund is made up of small and midcap stocks - it is basically an all market index containing approximately 5000 U.S. stocks, minus the 500 stocks that make up the S&P 500. The Russell 2000 has about - you guessed it, 2000 stocks in it, so that means there are in the neighborhood of 2500 other stocks outside of the Russell and S&P 500, in the S-fund. Those are the ones holding the S-fund back recently. It could always change.
We're seeing some kind of rotation over the last several weeks but because the Nasdaq 100 / FAANG stocks refuse to rollover, it may just be a very slow process. At least at first until investors catch on and then it may accelerate. Who knows, but something is happening.
Here is that equal weighted S&P 500 chart which is basically the S&P 500 with all 500 stocks being counted with the same value, rather than by market capitalization as the S&P 500 is. It was up over 1%. So the same 500 stocks, when viewed differently in two different indices, shows one up 1.05% yesterday, and another +0.27%. That's a change from what we're been seeing this year.
That is sort of a good thing because it means the broader market may be stepping up rather than having 5 or 10 huge companies run the show. On the other hand the C-fund is made up of the S&P 500 which rewards those larger tech companies more, so if they lag, the C-fund could lag.
But we may be premature in calling for the death of large tech. Here's the Nasdaq 100 which is a large basket of all of the major tech stocks. We get a couple of down days and we're all talking rotation out of tech. Does this chart look like it is in trouble right now? I'd say, not yet.
Here's the Russell 2000 which is moving in the right direction, but it had been lagging behind until recently. The Nasdaq 100 surpassed its June 8 high about two weeks after its pullback. The S&P 500 passed its June 8 high in mid-July. The Russell 2000 did it last week. So is it just playing catch up temporarily or is this trying to be the new leader? We know small caps can have explosive years.
The S&P 500 (C-fund) continues to climb the wall of worry leaving those small open gaps behind -- for now. They'll likely be revisited at some point, but not yesterday. I expect a lot of turmoil in the political world between now and the election so for those looking for an opportunity to buy, the question is whether the market can continue to climb that wall of worry. We may get some interesting headlines coming out. Will the market care or is it all about the economy recovering?
The year to date chart shows that we have passed the 2019 closing price - meaning the S&P 500 is positive for the year, but those key levels can be turning points. When the S&P dipped to that line in early February, it got a bounce. On the way back up in June it hit that line again and we saw a few weeks of volatility and pullbacks. It crossed back above it in July and now it's getting close to the 2020 high made in mid-February. A double top pullback at that point seems extremely obvious. I can hear the cries of "get me out, I'm even!" But it may be so obvious and expected, that the market could make those folks regret selling. I have no idea, but that's the psychology of hitting that February high which, just 1% away, could happen any day now.
The DWCPF (S-fund) was up 0.08% yesterday while the Russell 2000 was up 1%. That's a tough one for those who chose the small caps fund. You're not being rewarded for calling a rally in small caps. Perhaps just a phase. So far the chart looks OK having broke above a normally bearish rising wedge, but as I motioned before: if you take away that peak in July it would look more like a bullish cup and handle breakout.
The EAFE (I-fund) was up modestly despite another positive day for the dollar. It's still surprising that this fund hasn't outperformed the U.S. funds over the last several weeks given how much the dollar has fallen.
The Dow Transportation Index took it to another level yesterday breaking above the resistance line of its rising trading channel. What's not to like here, except maybe that it has come too far, too fast?
BND (bond ETF / F-fund) followed through yesterday, on Friday's weakness and negative reversal. I think the bond market was surprised at the strength of the jobs report and that sent yields higher. The decline yesterday took it below that long rising channel and support line.
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
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.
