TSP Talk Blog

Another dull day. Another day where stocks closed stronger than they opened. Another record for the major indices. Another gain for the Dow (+16), which makes 12 days in a row, tying the all-time record from 1987. Other than that, not much happened yesterday.

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Something tells me 2017 is going to be a wild one, but that doesn't mean the rally has to end any time soon. They seem to go on longer than seems reasonable.

The 12 day winning streak in the Dow, which happened only one other time since 1897 (eighteen ninety seven), matches the January 1987 (nineteen eighty seven) streak. As we mentioned yesterday, that was also the year that saw the largest one-day decline of 23%. But it took about 9 months between the streak and that decline to happen so again, who knows how long this rally can last?

The SPY (S&P 500 / C-fund) ticked up another 0.16% as these strong closes repeatedly inch the indices into new record territory almost every day. We know that stocks, when they go down, tend to move down faster than they moved up. So these small gains are nice if you're adding to your account, but eventually something will happen to shake things up, and that's when we could see a decline that takes away weeks worth of gains in just a day or two. So, as I've been saying, taking something off the table is not a bad idea if you have gains to protect.




The DWCPF (S-fund) bounced off the 20-day EMA on Friday in a textbook move, and followed through on Monday with a big rally - more textbook action. It looks like the next move might be a new high but lately new highs here have been met with some selling in the coming days.




The Dow Transportation Index rallied and continues to make a series of higher lows while hitting the overhead resistance and failing recently. This looks like a pretty good consolidation because unlike the S&P 500, the Transports are sitting about where they were in early December.




The EFA (I-fund) was up slightly on the day after falling below a wedge formation on Friday. It's small, but that does look like a bear flag forming.




The Japanese Nikkei fell sharply on Monday and it is again clinging just above the important 50-day EMA. It has been holding each time it has been tested but as they say, if you keep on knock'in, eventually someone is going to open the door.




The AGG (bonds / F-fund) slipped on Monday. Technically, it is trying to fill Friday's open gap, but it also remains above the key 200-day EMA.




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

Tom Crowley


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