TSP Talk Blog

The Dow gained another 152-points on Thursday and the celebratory Dow 25,000 rally caps were waving on the floor of the NYSE. The Nasdaq, S&P 500, and the small caps gained between 0.18% and 0.40% so more solid gains to start the new year. The dollar was down again but the I-fund was flying with or without that.

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Administrative Notes: The 2018 Guess the Dow Contest is open with a deadline of COB this Friday.

All good things must come to an end but there is not necessarily a timeframe, despite nearing historical duration records for stability in the market. This market's action is reminiscent of 1995, for those who remember those days, but there was something new brewing back then that was going to revolutionize the world... The Internet.

I'm not sure what we have going for us now except for maybe tax cuts and deregulation. That will be positive for corporate earnings, which is the lifeblood of the stock market, but it's not revolutionary so I don't know if the comparisons are valid.

The 1995 rally did go on for several years but volatility did eventually pick up a little. If this market can keep up the same pace it has been on will continue make things very difficult for market timers and very easy for the buy and holders.



By the end of the bull market in 2000-2001 there was a market analyst named Ralph Acampora, who was as bullish as you can get just before everything peaked and rolled over. He was on CBNC every day back then giving that same analysis to the end. Yesterday he was on CNBC and actually said, "I am so bullish, I have to sit down and calm down", or something to that affect. That's a sentiment that you normally hear closer to a top than a bottom. Video

We get the December jobs report this morning (Friday) and consensus estimates are looking for a gain of 188,000 jobs, and an unemployment rate of 4.0%.


The SPY (S&P 500 / C-fund) just keeps on moving forward. It did hit some overhead resistance and pause a bit, but it may just be another line in the sand that it crosses. A move to the bottom of the channel seems like a reasonable place for a pullback target, but everything is still moving toward the top right.




The small caps / S-fund did breakout yesterday from that nice looking consolidation, but the large caps have continued to be in the spotlight.




The EAFE Index (I-fund) went a little parabolic yesterday. We've talked about exhaustion gaps over the last few months but none have produced tops as we thought possible. Well, here's another one that feels like an exhaustion, but perhaps it's just the start of a new higher angle of incline? I don't know what to think anymore.




The High Yield Corporate Bond Fund rallied made a new high yesterday and the easy credit does tend to be a good sign for stocks. There could be some resistance near 88.00 but this remains in a long-term rising trend.




The AGG (bonds / F-fund) was down as stocks rallied and yields inched up. The trading range is still very much intact.




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Thanks for reading. Have a great weekend!

Tom Crowley


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