Daily Market Commentary

The strength in the bond market continues and that is pushing yields lower, giving the stock market reason to hang in there despite some overbought conditions. The major three indices were up modestly, while small caps were down but holding firmly at a key moving average. The action has actually been quite boring, and a boring stock market tends to favor the bulls, but it is vulnerable to any bad news at these lofty levels.

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After a weekend of turkey sandwiches, the stock market had a little too much tryptophan in its system, and was doing a lot of napping on Monday. Stocks were sluggish, which is about what the seasonality chart suggests happens after the bullish activity during Thanksgiving week. The Dow lost 57-points and the modest losses permeated throughout most of the broader indices as well. Yields were down giving the bonds and the F-fund a nice bounce back day.

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The holiday action has favored the bulls, despite some weakness in the Nasdaq. It did take a last minute rally to push the S&P 500 out of negative territory during Friday's shortened trading day, but the Dow had a solid triple digit gain and the more aggressive S and I funds had very strong days. Bonds were hit hard as yields moved up and may have broke resistance, and the dollar moved down again helping that I-fund lead the way on Friday.

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The Wednesday before Thanksgiving saw a typical seasonally bullish day as stocks rallied heading into the holiday. The Dow gained 185-points with gains near 0.5% in the three major indices, while the back and forth of the small small caps saw them leading again. Bonds were up slightly as yields dipped a bit.

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The market gave us a mild reminder yesterday that stocks don't go up every day, but the losses were quite benign in the big three indices, particularly given the strength recently, although small caps did take a bigger hit. The Dow lost 63-points on Turnaround Tuesday, and after the major rally leading into this week, a little pre-holiday reversal may be unfolding. Bonds and the F-fund were up, while the I-fund pulled back.

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