TSP Talk Blog

Stocks saw some positive follow-through the recent rally. The Dow gained 56-points and we saw 0.50% to 1% gains in most of the major indices. Volume was higher being the last trading say of the month and we saw the S&P 500 (C-fund) and the I-fund close out the month of August with a gain, if you can believe that. The S-fund finished August with a loss of 0.41% despite Thursday's 1% rally.

Daily TSP Funds Return More returns

The Nasdaq 100 index made new closing high yesterday. What a difference a week can make. Bonds and gold are making new highs as well, which makes for a curious situation. Gold can go up as a safety play, as do bonds, but that's when stocks are falling. Gold also goes up on inflation concerns while bonds would go down when inflation is on the rise. Does this mean this market stock rally is being hedged with safety plays? Is it a play on the weak dollar? Or was this week's rally just an end of the month reallocation?

The new month will start out with the August Jobs Report, which gets released this morning (Friday) and consensus estimates are looking for a gain of about 185,000 jobs and an unemployment rate of 4.3%. Will it confirm the recent rally or trigger some profit talking?

One more time on the seasonal pre-holiday strength before Labor Day weekend, and the not so strong post holiday historical action. (This is an old chart of 62 years from 1950-2011).


Chart provided courtesy of www.sentimentrader.com


This is also a repeat from Thursday but still very pertinent... Those pre/post holiday reversals and yesterday's action did nothing to take the above off the table. We got some pre-holiday strength and when we look at the dollar or the Transports it shows breaks from the larger trends that they have been in, which is what these pre-holiday reversals do, and theoretically the larger trends would resume after the holiday. The problem of course is that stocks were struggling before the last couple of days so will they also reverse down next week? One caveat is that a tax reform bill could trump (no pun intended) any holiday trends or biases.

A couple of other points of note:
With Thursday's rally to end the month of August, the C fund has now had 9 consecutive positive months in a row going back to last November. The last streak coming close was 8 months in a row in 2010 - 2011. When that streak ended in May of 2011, the C-fund was down for 5 consecutive months. (note: The S&P 500 was actually down 0.04% in Mar. 2017, but the C-fund was up 0.12%).

There was also an 8-month winning streak in 2006 - 2007 but when that ended there was just one negative month followed by 3 more positive months.

There was an 8-month winning streak in 2000 - 2001. That ended with losses of 9.1% in February 2001, followed by a 6.3% loss in March of 2001.

Can September make it 10 months in a row? I think maybe a tax reform bill could make it so, but then we'd have to look for a "sell the news" reaction. The market likes to breathe in and out so it's tough to keep these streaks alive that long.

Per www.tsp.gov: "Some financial markets will be closed on Monday, September 4th in observance of the Labor Day holiday. The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (September 4th) will be processed Tuesday night (September 5th), at Tuesday's closing share prices."
2017 TSP Talk "Last Man Standing" NFL Pool - It's easy... and free!


The SPY (S&P 500 / C-fund) rallied 0.52% on Thursday pushing it further above the resistance that was holding it back for a couple of weeks. Once it filled the open gap after the NoKo missile launch, it got into another gear and now the chart is greatly improved, but how much of that was tricky pre-holiday, late summer, low volume misdirection, if any?




The DWCPF (small caps / S-fund) has exploded off the lows made two weeks ago and on Thursday it gapped up above the 50-day EMA, closing there for the first time in almost 4-weeks. An earlier open gap was filled on the rally yesterday.




The Dow Transportation Index didn't really participate in Thursday's rally but it is now above the key resistance levels it briefly broke on Wednesday. It also filled that tiny gap of the prior peak.




The EFA (EAFE Index / I-fund) had a good day but remains in a somewhat unsettling bear flag and is hitting the resistance now.




The dollar (UUP) pulled back after the rally on Wednesday, and that helped the I-fund The dollar seems to be struggling at the descending resistance again, plus there's an open gap below.




I posted this French CAC 40 chart the other day showing the trouble the European markets have been having but we saw that big reversal day at the bottom of the channel and below the 200-day EMA. There is still a lot of resistance overhead so it will be interesting to see how this plays out. The I-fund continues to lead the TSP funds, but most of it is because of the weak dollar alone, because these charts look bad, unless the 200-day EMA can nark a low.




The AGG (Bonds / F-fund) closed at a new high. With stocks rising and gold rising, this is a curious situation and I don't really have an explanation about why they seems to be going in directions that don't relate to each other, or at least as we'd expect them to.




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. Have a great holiday weekend!

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.