TSP Talk Blog

Stocks were up sharply on Friday, continuing to churn near the recent highs. The Dow gained 400-points on the day so it was another big day this month, making it 7 of November's 10 trading sessions that saw the Dow gain 250-points or more, with one 300+ point loss thrown in there too. Is that a good sign, or a sign that stocks need a rest before going any higher?

Daily TSP Funds Return More returns

I had some questions about the I-fund last week, where EFA was up 1.54% on Friday yet the I-fund only paid 0.39%. Because the Asian and European markets trade mostly while our markets are closed, sometimes the TSP has to make adjustments to the I-fund price based on what is happening to the dollar and in the U.S. markets while the overseas markets are closed.

Friday's pricing was likely done because of what happened on Thursday. The EFA was down 1.46% on Thursday but the I-fund was given a gain of 0.57%, so Friday looks to be an adjustment to Thursday's price.

There's no shenanigans and it seems to work out each month, but in the short term it can make it a gamble when moving your money in or out of the I-fund on any given day. You hope that it works in your favor when you do it, but there's no guarantees.

As you'll see in the chars below, stocks have come a long way in November after the late October sell-off. The S&P 500 has been chopping around since last Monday's big move on the vaccine news, and the high made that day has so far been the high for the year, but because that was a negative reversal day, Friday ended up being the all-time highest closing price we've seen on the S&P 500, despite closing almost 2% below last Monday's intraday high. That makes for a possible upside target, but there's no guarantees.

The futures are showing a possible strong open again, but as we saw last Monday, Monday morning gaps don't always hold into the close.

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The S&P 500 (C-fund) closed at its highest level ever on Friday, but as we talked about last week, last Monday's high and negative reversal could be meaningful. The reversal is the opposite of the positive reversal in late October, and the low in September also has a positive reversal that was tested, so on the way up toward last Monday's high, we have to be cognizant of the fact that it "could" be a temporary peak, even if tested.




There are now two flags that I see on the S&P 500 chart. One is a big bull flag (blue), and one is a smaller bear flag (red.) The futures are up on Sunday evening so if that holds into Monday's open, it could negate the bear flag.




The weekly chart created a spinning top weekly candlestick last week and there is some long term overhead resistance just above 3600.




The DWCPF (S-fund) also made a new closing high but that sore thumb on November 9th is still a potential problem. There's also some resistance near 1735.




The EFA (I-fund) looks like it is making another flat top, and as Oscar Carboni likes to say, flat tops bring market drops. The futures being positive may make that theory moot today. So many open gaps below however, and I don't know how long a new one would last.




BND (F-fund) closed right on its 50-day EMA and held below that resistance line which is the top of that recent trading channel.




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Thanks for reading. We'll see you back here tomorrow.

Tom Crowley


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