TSP Talk Blog

12/30/11

Stocks rebounded on Thursday, getting back most of Wednesday's big losses. The Dow gained 136-points and Friday may be the last day of the positive seasonality assistance.



For the TSP, the C-fund gained 1.07% yesterday, the S-fund was up 1.27%, the I-fund gained 1.14%, and the F-fund (bonds) added 0.06%.

The chart of the S&P 500 looks better with the index back above the descending trend line and the 200-day Simple Moving Average. The 50-day EMA is also just 4-points below the 200-day EMA and if those two cross, we can officially say we are in a bull market. The problem is, these two crossing will probably bring with it some overbought conditions and a little pullback.


Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

You can see that the smart money of the OEX put / call ratio is quickly growing more bearish and if we can see some gains again today (on Friday) we could hit the 2.00 level and that has been bad news for the stock market in 2011.


Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

Today does have a positive bias going back to 1950, but in more recent years the results have not been as positive. For whatever reason the 2nd trading day in January has a strong positive bias...


Chart provided courtesy of www.sentimentrader.com

...and while I am considering going into more cash this morning (G-fund) for next week, the 2nd trading day in January has been positive over 70% of the time with an average return of nearly 0.50%. The question is, will a rally on day 2 just be a rebound from a sell-off on day 1? - similar to Thursday's big rally of this past week, which only only gained back the losses from Wednesday? And after day 2, things turn sour seasonality-wise, for a few days.


Data provided courtesy of www.sentimentrader.com

I don't usually use seasonality as a primary indicator, but during the week before and after Christmas it is right up there in priority with any of my indicators. But once we get past the New Year - except fro maybe that big old green bar for next Wednesday - that changes and I focus back on the indicators and the put/call ratio above is one of my favorites, and it is not exactly telling a bullish story for next week.

Administrative Note: For anyone who does not currently have an account on the AutoTracker, and wants to be on it for all of 2012, you will have until Tuesday Jan 3 at 5 PM ET to get on it. Of course you can get on it after that date, but you will have a partial year return for 2012. If you already have an active account in 2011, you DO NOT have to do this. Your account will rollover to 2012, so please don't ask because I will be very busy this weekend with end of year stuff. Click here for more information.

Thanks for reading! Have a great holiday weekend and a Happy New Year!

Tom Crowley


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.