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Has Santa Had his rally already?

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After an explosive two day rally, stocks stabilized a bit on Friday but still posted some moderate gains and ending the volatile week with a lot of green numbers. The Dow was up 27-points and ended the week with a 524-point gain.

Daily TSP Funds Return
The I-fund lagged with the dollar having a strong day on Friday. Bonds (F-fund) were up.


The SPY (S&P 500 / C-fund) hit a new all-time intraday high on Friday, and if it wasn't for the late selling, it would have closed at an all-time high. There is clearly some resistance at the current level whether looking at the rising neckline of the inverted head and shoulders pattern, or the late November / early December highs. The open gap has my attention but the runaway action of the indices on Thursday may mean the gap could remain open for a little while. It may depend on whether or not the overhead resistance holds early this week.


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


Oil is trying to stabilize as it closed at its highest level in five days on Friday. Not a great showing, but as least the bleeding has stopped for now, and if oil can rebound it will give stocks a reason to continue to rally - if that was the reason they had sold off as we've talked about.

The weekly chart produced a positive reversal bar, which has led to further gains for the last several years, but the weekly chart is also getting very close to the long-term overhead resistance line. The 210 area may be where this thing peaks and that's only about 2% away right now.


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


The Nasdaq hasn't hit its November high yet so it has a little breathing room before hitting resistance. Last week filled the open gap from late October, but also produced a new open gap, which makes two large gaps that will likely be revisited at some point, but probably not until in 2015 if the positive seasonality cooperates this year.



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

The
Wilshire 4500 (S-fund) is up against the top of its inverted head and shoulders resistance line. The question is whether it has the strength to breakout after the three-day explosion higher.


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

The
EFA (EAFE Index / I-fund) posted a small gain as the strength in the dollar held it back a little. It looks like a descending inverted head and shoulders, but it is also in a downtrend in a bear market so it's not looking great for now. A move over the 200-day EMA and descending neckline could change that.


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


Today is trading day number -3 on the Christmas Performance Chart. Just one day has a small negative average return out of the 10 surrounding Christmas Day, and that would be tomorrow. After Tuesday it's normally pretty smooth sailing but even averaging being up 65% to 70% of the time, it means 30% to 35% of the time it is negative.


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

The AGG (Bonds / F-fund) tried to get back above the descending resistance like of the pennant formation on Friday, but could not close above it. If stock continue to rally, look for the AGG to test the bottom of the pennant and possibly breakdown after the recent fake-out-breakout.


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


Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the Sentiment Survey Results and 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


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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