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Coolhand's Market Analysis

A Mixed Week

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The market's performance last week was quite mixed. It isn't all that often that the 3 TSP stock funds have such a wide range of end-of-week performance, but they did last week as the C fund ended almost flat with a very modest 0.09% gain, while the I fund was down 0.47% and the S fund jumped higher by 1.7%.

Obviously, if you were in stocks last week you wanted to be in the S fund. But it was probably just a matter of time before the S fund caught up (to some extent) with the C fund as the S&P 500 was outperforming for much of the past couple of months or so.

Transfer 7/23 for 7/26/04-spx-png

Looking at a daily chart of the S&P 500 shows that this index fell very hard toward the end of August, with RSI plunging deep into oversold territory, recovered a good portion of its losses by mid-September only to head lower again to test its previous lows. After a successful test the rally was on and you can see that from about the beginning of October there was very little opporuntity to by a dip as the index retraced its August losses. But it didn't make it to a fresh all-time high before falling again to almost its 50 dma before quickly recovering back above its 200 dma. Last week, price tracked mostly sideways. Strength and momentum have gone flat. Volume was low last week, which was not unusual for a holiday week.

So now what? The chart is bullish in that price is above its 200 dma, but price seems to have hit a wall. It may be topping. But this is a tough time of year to be looking for tops. Seasonality is becoming more positive and that fact isn't lost on most traders.

So will Santa deliver the goods again this year? I would like to think so, but there is one event left this month that has the potential to give pause and that's the upcoming FOMC policy statement set for release on December 16th. There has been a lot of jawboning for some time about rising interest rates, but so far the Fed has chosen to hold off any such hikes. The odds makers are giving about a 70% chance that the Fed will hike rates this time around. But what if they don't? What will the market think? Perhaps more importantly, what will the market do as we head into the holidays?

It's been a tough year to make any money in the TSP. To date the C fund is the best performing fund with a yearly gain of 3.55%. The I fund is the next best performer with a 1.84% gain and the S fund is not far behind with a gain of 1.45%. I have been fortunate to beat those indexes with a current gain of about 6%. I am hoping to add to those gains by year's end. But it will largely depend on how much support (liquidity) is provided to the market. Currently, liquidity is in expansion, which is bullish. But it was in contraction during the big sell-off a few months ago. I like to watch liquidity levels for signs of underlying market support (or lack of it). It is one of the indicators that I use to help assess risk when deciding what my TSP position should be. It's not easy and having only 2 IFTs per month makes it even more challenging, but I don't like the alternative of just letting fate determine my financial well being.

I hope everyone had a blessed Thanksgiving and that good fortunes find you and your family as we head into the holiday season.

~Coolhand

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Updated 11-30-2015 at 12:21 PM by coolhand

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Comments

  1. Cactus's Avatar
    Oh Oh! Shouldn't this blog post only be visible to Premium Service members? It showed up when I wasn't even logged in.
  2. coolhand's Avatar
    Hello Cactus. I am going to be blogging maybe once each week. It is separate from my premium stuff.

    Quote Originally Posted by Cactus
    Oh Oh! Shouldn't this blog post only be visible to Premium Service members? It showed up when I wasn't even logged in.
  3. Cactus's Avatar
    Sounds good, coolhand. Welcome back. I remember looking forward to your posts back in the old day before you went the premium route. It will be good hearing from you again.

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