TSP Talk Blog

Stocks were mixed on Tuesday with slight losses in the Dow and S&P 500, and small gains in the Nasdaq, small caps, and the I-fund. Bonds also had a nice day. Trading volume was about 1/3 of normal during the holiday shortened trading session.

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I hope everyone enjoyed their holiday. The rest of the week "should" be quiet, but because trading volumes can be so low, any kind of news event could propel volatility and therefore there's always a chance for big moves this time of year. Last year we had a 2.75% loss on the half day of trading on Christmas Eve, so you never know. There are actually many examples of 1% plus moves during this normally quiet stretch between Christmas and New Year's, and then after New Year's Day it's common to see big moves in one direction or the other.

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The S&P 500 (C-fund) was flat on Tuesday for a second day, and during this recent rally, two sideways to slightly down days has been all it has needed before sparking another move higher. If it continues we could see another pop in the coming days, but as noted in the chart, the S&P 500 is now 253-points above its 200-day EMA, and that's getting quite extreme, and point-wise the widest spread between the two in years - even wider than the market peak in February of 2018.




The DWCPF (S-fund) ticked up on Tuesday to another new high but it is bumping into some rising resistance (middle blue line) but it is also holding above that old resistance line (red), which may be trying to turn into support.




The EFA was down on Tuesday but the I-fund was given a gain. I often get asked why the I-fund didn't pay as much as the EFA shows on a given day, but rarely do I get questioned when the I-fund is paid more. There are many thing involved including the fact that overseas markets close much earlier than our markets, yet EFA continues to trade during U.S. trading hours.




The Yield on the 10-Year Treasury has been hitting a wall near the 1.95% area in recent months, and the F-fund will be at the mercy of this pivot point with it (bonds and the F-find) likely moving in the opposite direction of this chart's next move.




The AGG (F-fund / bonds) had another nice pop on Tuesday as it continues to wiggle within that bull flag / narrowing wedge-like formation. That is a bullish formation but bonds don't always play the typical technical analysis game. There are a couple of open gaps below that are certainly a lure, so for now the 50-day EMA and the bottom of that flag are must hold areas.




Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
Thanks for reading. We'll see you back here tomorrow.

Tom Crowley


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