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September could be a tough act to follow

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Stocks opened slightly higher on Friday and they slowly drifted upward throughout the day, closing at the highs. The Dow gained just 24-points but the broader indices produced more meaningful gains with the Nasdaq (+0.66%) leading the way, along with the I-fund, which gained 0.53%.
Daily TSP Funds Return

It was the final trading day of September, which historically has been the worst performing month of the year for stocks, but this year the bulls were completely in control posting impressive gains.

The prospect of tax cuts seems to be keeping the bears from getting involved at all. Outside of that, the situation in Spain, where a referendum vote on Catalonia's independence is being violently disrupted, may cause some turmoil in the markets - I'm not sure - but I see the futures opened to the upside so perhaps not.

Other catalysts may include the 3rd major hurricane cleanup to deal with in Puerto Rico, and then there's always the volatile relationship with North Korea. Earnings season is coming up within a couple of weeks so that's about what the market has to deal with in October, which has a dubious reputation because of some major market crashes over the years, but if you take away those crash years, October actually does pretty well historically.

This coming Friday we will also get the September jobs report and estimates are fairly wide with a consensus of a gain of just 75,000 jobs and an unemployment rate of 4.4%. That 75,000 would be about half of what we saw in August and the hurricanes may be showing their economic impact.

I have a pretty full plate this week so I'll warn you in advance that there may be a few days coming up this week where I'll have to be brief and may be delayed in responding to emails. I apologize in advance for any inconveniences.

Administrative Note: It has come to our attention that some agencies / branches of the military (most recently the Navy) are blocking TSP Talk. We've seen this before and sometimes there is something you can do about it. If you are in the Navy and having this issue, one of your members sent me this form that can be filled out and emailed to the address on the form. I think if they get enough requests they will reconsider. ( Download Exception-Request-Form Word Doc ) Other branches should have their own exemption form which you can probably get online. Thank you!


The SPY (S&P 500 / C-fund) keeps plowing forward but is nearing a couple of areas of resistance - both of which are rising, however. The red trading channel is parallel channel and currently the bottom of it is also the bottom of the large open gap near 246.




The weekly chart continues to rise but the range is narrowing and the S&P 500 is up against some possible longer-term resistance.





The DWCPF (S-fund) is also stretched and testing some extreme resistance levels.




The Dow Transportation Index has had a great run over the last 5-weeks. The rally from May to July was equally impressive but it was not quite at the angle of incline that the current rally is in, and that does set up some thin levels of support should it start to pullback.




The EAFE Index (I-fund) had a big day on Friday and the trend continues to be up, with another possible higher low made last week.




The Fear & Green Index is in the mid-80's and that's getting on the extreme side. This isn't a terrible intermediate or long term indicator, but short-term I'd expect at least some digestion of the recent gains.


Source: Fear & Greed Index - Investor Sentiment - CNNMoney

The AGG (Bonds / F-fund) created a very nice looking positive reversal day on Thursday but it could not follow through on Friday as the selling in bonds resumed. The tax cuts would put this kind of pressure on bonds because of the potential for increased inflation, which could mean higher bond yields - lower bond prices. But the 50-day EMA has held for several months and that's about where the AGG sits now.




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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S&P 500 (C Fund)
S&P 500 INDEX,RTH (^GSPC)
DWCPF (S Fund)
Dow Jones U.S. Completion Total Stock Market Index (^DWCPF)
EFA (I Fund)
iShares MSCI EAFE Index (EFA)
AGG (F Fund)
iShares Lehman Aggregate Bond (AGG)