TSP Talk Blog

It was another ramp up Monday, but unlike last week, stocks held onto their gains into the close, and now many indices are at or near those prior highs. A midday afternoon swoon was bought by the bulls and the Dow ended the day with another big triple digit gain of 471-points. Another promising vaccine headline, this one from Moderna, helped the week get off to a good start.

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The market is loving the good news headlines but this time the bears didn't sell the news rally. It was just last Monday that Pfizer reported great results from their vaccine trials, but look how that stock reacted since last Monday's initial spike higher.




Now Moderna comes out with a good result, and while the stock didn't close at its high of the day, it did close with an impressive 10% gain. Perhaps two heads are better than one as the world watches for any news that may indicate that it's safe to go out and get the economy rolling again.




As for the market, the S& 500 made another new closing high and while it may want to eventually break out, the long term weekly resistance lines in the area may be telling us that it's time for a break.

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The S&P 500 (C-fund) hasn't backed down after what was looking like a potential peak last Monday, but as I have been saying, sometimes we get a test of the old highs (or lows like in September) before we see a reversal. Is the news too good for that to happen? Maybe, but in my experience markets peak when the news is the best, and bottoms when things couldn't look any worse. I don't know where we are in that range, but the S&P 500 has just rallied about 400 points, or 12%, in the last 12 trading sessions since the October 30 low.




The year to date chart shows the overhead resistance and it looks like a classic "sell high" scenario, but a case could be made that we are completing a cup and handle formation (blue) and they do tend to breakout to the upside.




The DWCPF (S-fund) led on the upside yesterday and closed above last Monday's high after breaking through a couple of levels of resistance.




The EFA (I-fund) also broke out - so much for the flat top / market drop theory. But look at all of those open gaps there for the bears' taking, if they have the fortitude to do so.




The Transportation Index - new highs, but still some resistance in the area.




BND (F-fund) had a bit of a breakout too. Not to all time highs, but it made it back above that blue descending trading channel again. There are gaps above and below the current price so perhaps this will continue to chop around for a while. I'm a little surprised to see BND and the F-fund up yesterday since the 30 and 10-year bonds were down on the day.




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

Tom Crowley


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