TSP Talk Blog

Stocks had another reversal yesterday, this time to the upside as the Dow reversed a 200+ point loss into modest 45-point gain by the close. The gains moved the Dow and Nasdaq into positive territory for the week, while the S&P 500 is still down a handful of points. There's a battle going on in the market between vaccine hopes and economic concerns over the COVID case counts going up.

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The internal numbers were strong and the gains were broad across most indices this time, and many turned moderate early losses into gains by the close.

We did get some weaker than expected jobless claims numbers and that sent the stock index futures down some before the opening bell, and pushed bond yields lower, but as the day wore on that trend reversed as investors are banking on a vaccine and an eventual stimulus package.

As good as the day was, after the bell yesterday the S&P 500 futures erased all of their gains for the day (down about 18-points after hours), and then fell further (about 30 more points) in the first few minutes after the futures resumed trading on Thursday evening, so it will be interesting to see how the market opens up today.




Apparently Treasury Secretary Mnuchin said they are going to end some of the Treasury's capital programs that were set to expire at the end of the year, while keeping others in place.

The action remains fairly bullish, but we do have some "double top" formations still in play that could slow the rally down, at least temporarily. And with the after hours sell-off yesterday, we'll see just how enthusiastic dip buyers are.

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The S&P 500 (C-fund) was down early but came back to close near the highs of the day. It closed below the September high, but remained above the October high. Officially, we could still say that we are failing at a double top, but clearly it is close enough to break out to the upside with another rally. Any close below 3550 could be a warnings sign.




The DWCPF (S-fund) just keeps piling on the victories and leads the market higher with yet another record close yesterday. It's been over 3 weeks now since this rally started off the October 30 low, but I don't know if this angle of incline can last much longer.




The EFA (I-fund) closed with a decent gain after the dollar reversed an early rally and fell to close down on the day. One small open gap was filled (almost) but there are four more below that will come into play eventually.




The Transportation Index fell sharply in early trading Thursday, hit the bottom of that rising support line and rallied into the close to end the day flat, and create a positive reversal day. The open gap from last Friday was not quite filled, so we have to keep looking over our shoulders at that possibility.




The Volatility Index again tested the 22 area and held, and also the descending resistance line was tested and held so something is going to have to give here soon.




BND (F-fund) rallied on the weaker jobless claims report and this recent rally has now extended itself past the resistance line and can be considered a breakout. It's interesting to see yields falling (bonds rising) and stocks doing so well at the same time because the reason yields are falling is because of the possibility of an economic slowdown caused by the rise in COVID cases, so stocks must only be going up because it expects stimulus?




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Thanks for reading. Have a great weekend!

Tom Crowley


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