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TSP Talk: Over extended market meets positive seasonality

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Stocks were mixed on Wednesday with the Dow and S&P 500 posting modest losses while the Nasdaq and the smalls caps were both up on the day. The Dow ended the day down 174-points.

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Trading volume was on the light side, and with today being just a half day of trading, it will also be a very light day of trading. That usually benefits the bulls as traders (and the bears) tend to take the day off while investors continue to add to their 401K's and dollar cost average in with paycheck contributions.

However, if there are any news events, the light volume can trigger a big move if the action gets pushed by just a few big money traders, so while the historical seasonality charts are on the bulls' side on the day after Thanksgiving Day, the bears could become a factor if given a good reason. The question may be, are over-extended indices a good enough reason, because they are over extended.

As I mentioned on Wednesday, this is just a quick message today so we can all get back to our holiday weekend.

The S&P 500 (C-fund) broke out of what could be a bull flag on Tuesday, took a breather on Wednesday, and the question is whether the recent consolidation since the November 9th high will be enough to send the index higher after that giant rally, and that possible double top. Good formation, but some poor indicators, especially in sentiment.

The DWCPF Index / S-fund continued to grind higher after 8 of the last 9 trading days were positive. As the nosebleed rally gets extended, a test of the old resistance line, near 1750, would be a healthy consolidation at this point.

And being the hot fund, the S-fund has been the focus of many TSP'ers, although the gains in the I-fund this month have given the S-fund a little competition. But this looks so unsustainable. Not that there are any rules that says it can't go higher, but just when you think it can never go down, we can be reminded again what the bottom of a trading channel looks like.

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Thanks for reading. Enjoy your weekend and we'll see you on Monday!

Tom Crowley

Posted daily at

The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.

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  1. Bullitt's Avatar
    Best November since 2001 for Nasdaq and best in history for S&P 500 - and we're entering a positive seasonality period.

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DWCPF (S Fund) (delayed)

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EFA (I Fund) (delayed)

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BND (F Fund) (delayed)

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