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Bounce back

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It was another wild 24-hour period for stocks as the weekend news and opening futures had us believe that Monday could be an ugly day, but what seems more common lately, by the time the market opened on Monday morning, the futures recouped all of their losses and the day ended with solid gains.

The indices did close off the morning highs and the early triple digit gain in the Dow ended with a again of 46-points. The small caps shined with a big 1.5% gain, getting back a big chunk of last week's losses.

Daily TSP Funds Return

It was reminiscent of Election night, but not to the same degree. The futures were getting hit hard and the news looked like it was going to have Wall Street scrambling, but apparently investors were still looking for a buying opportunity, and after a week of declines, they may not have been able to wait any longer.

There are still some signs that the market has come too far too fast, but the bulls took momentum back again.

Seasonality is actually historically pretty good during this short stretch between December 4th - 6th, but things taper off on the 7th into the middle of the month before the Santa Claus rally kicks in.



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The SPY (S&P 500 / C-fund) picked up 0.6% yesterday and that pullback has reversed for now. A small gap was opened that could be revisited. The question on the mind of investors and traders is whether this is the start of the Santa Claus rally, or if it's too early and is there a little more consolidation left before that starts?




The Nasdaq 100 (QQQ) had a big day after suffering some big losses to end the week last week. The rising support line seems to have held for now, but that 50-day EMA could be a test for the struggling large cap techs.




The Dow Transportation Index made new monthly highs again and look good, leading the market to the upside for weeks now. The close was a little weak and not exactly what you want to see on a breakout, so today's action will be important. Are the bulls still willing to buy up here?




The dollar looked like it was going to rally in overnight trading after the Italy "no" vote, but by the time the market opened Monday morning the dollar started to rollover and was down sharply, and we know that's a good thing for the I-fund.




The EFA (I-fund) broke above the descending resistance line convincingly with that weakness in the dollar. But look where it stopped... Right at the 50-day EMA. This could be a tough spot in this I-fund bear market so we'll see what it gas got.




The AGG (bonds / F-fund) was up again and seems to be trying to bounce, but it remains in a downtrend. I could still see it making a move to the 20-day EMA in the coming days, but any decent rally will probably be sold quickly.




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

Thanks for reading. We'll see you back here tomorrow.

Tom Crowley


Posted daily at www.tsptalk.com/comments.php


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