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Rally continues with a little push from Warren Buffet

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The momentum of the bull market freight train continues to roll, and when it looked like we could see things stalling early on Tuesday, we heard from Warren Buffet who said he does not think that stocks are expensive, and the indices turned around and closed with modest gains. The Dow added 84-points while the S&P, Nasdaq and small caps each added about 0.2%.

Daily TSP Funds Return

Yes, when interest rates are this low and bonds are paying very low rates, stocks may be considered inexpensive, but that probably means once interest rates start moving higher the market could be in trouble. The question is, with the Fed threatening (but not recently acting) to raise rates in December, when will the market start to react? Ironically, strong economic data would likely push the Fed closer to raising rates, and so the recent ISM report, which was the highest in over a decade, may or may not be good news for the stock market.

This coming Friday we 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%.

I have a pretty full plate this week so I'm keeping things on the brief side and I 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) disregarded the blatant road block formed by the rising resistance line, and it probably has Warren Buffet to thank. This is a bull market and it doesn't seem to take much to get the indices moving higher. Of course looking at this chart could give you nose bleeds so be careful.

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

The EAFE Index (I-fund) was up again and it is now testing the September highs. It looks like it could be forming a megaphone, or broadening pattern. There is such a thing as a megaphone top pattern, but megaphones are not necessarily a cut and dried bearish pattern.

The ISM manufacturing report came in the other day at a level not seen in over a decade, which is a good sign for economic growth. However, the economy is not the stock market, and actually stocks tend to peak more often when the ISM moves over 60 as it did in the latest report.

The AGG (Bonds / F-fund) was up for a second straight day as it crawls back above the 50-day EMA, which has been holding all year. There is an overhead gap but that could also be a bear flag forming so getting back to 109.70 might be tough, but it would be bullish move for bonds going forward if it can make it.

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:

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

Tom Crowley

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S&P 500 (C Fund)
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)