TSP Talk Blog

Stocks rallied on Friday with technology stocks of the Nasdaq stealing the show as it gained 2.2% on the day. The Dow was up, but only by 33-points, and the S&P posted a solid 0.81% gain. Small caps had a nice day while the I-fund lost ground on the day because of another rally in the dollar. Bonds (F-fund) were up 0.16%.

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The strong earnings reports and big moves in a few major tech stocks stocks investors on another buying bender, and possibly justifiably so, at least for the companies that did report good earnings.

A healthy GDP also helped fuel the rally as the preliminary reports had the economy growing at +3% in the third quarter, making it back to back 3% quarters. That was higher than expected.

Once again the market did not give the bears any love, nor the bulls waiting for a pullback any opportunity, as any recent declines have been quickly bought intraday and we haven't seen anything near a 1% decline on a closing basis for nearly 3 months now. I've mentioned before the remarkable stretches we've been in since we've seen 10%, 5%, or even 3% pullbacks.

Patience, normally one of the allies of investors and market timers, has been their bane instead as the market continues to rise while many wait for a buying opportunity and currently I am one of them. It will come one day, and hopefully for their (and my) sake, not after they give up on patience. I won't give up and chase because I have been down this road before. Of course a big concern, and this happens too, is we can wait, get a 5% pullback opportunity, and then the market falls 10% or more. It's not easy, just as it won't always be easy for the ones who are making money right now. How long should they hold? How much would they be willing to give back before selling on a pullback? As Mike Tyson said, everyone has a plan... until you get punched in the face - and buy and holders do eventually get punched in the face.

As I write this on Sunday evening, we know that there may be an indictment announcement on Monday regarding the Russia investigation in Washington. Obviously there are a lot of questions to ask, but my question is, will it be a significant figure that could rock the stock market? The futures market opened only slightly lower to flat on Sunday evening (as I write), so there doesn't seem to be much concern, but this could be a market mover depending on the name(s).

The FOMC meeting is scheduled for Tuesday and Wednesday of this week with a policy statement scheduled for Wednesday afternoon. There will be no press conference by Yellen so most are not expecting any changes in rates, so that means if they do make any changes, it could certainly shake up the market.

We get the October jobs report on Friday and estimates are looking for a lofty gain of 300,000 jobs and an unemployment rate of 4.3%.


The SPY (S&P 500 / C-fund) popped right back into its rising trading channel after the brief breakdown. These pullbacks have been so very benign with the last two recouping half or all of the losses before the market closed that day. The 20-day EMA held last week and that isn't a big surprise in a bull market, but again, there really hasn't been any opportunities for those on the sidelines to buy a pullback over the last couple of months.




The DWCPF (small caps / S-fund) moved above that narrow flag-like formation and it looks bullish here as well after a 3+ week consolidation. There is a potential resistance area at Friday's highs, where the old support line could pose some trouble, but I don't know. It would be tough to buy at these levels but the 3-week move sideways may be all the market is going to give as far as an opportunity to get in for those waiting.




The Dow Transportation Index is also in a bull flag after breaking down from its rising support line. It's hard to get too bearish on this chart unless this is some kind of top forming, but it will need to fall below the bottom of the flag before we can say that.




The EAFE (I-fund) was up but for some reason the TSP gave the I-fund a small loss on the day - possibly because of late weakness in the dollar on Friday that did not get taken into account.




The dollar was up big but reversed after nearing the 200-day EMA. Will that be the road block for the dollar's recent rally?




The AGG (Bonds / F-fund) was up nicely on Friday and with the overhead gaps still open, there may be a little more room to run. But that is a bearish looking chart and a bearish flag (blue) that could be a bad sign for bonds over the intermediate term. Of course the Fed could wave their magic wand at this week's FOMC meeting and change all that, but with the economic data getting stronger, I don't see how they could avoid talking rate hikes in the coming months. And rate hikes won't be good for bonds.




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

Tom Crowley


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