View RSS Feed

TSP Talk Blog

TSP Talk: Bulls fight right back

Rate this Entry
Stocks were mostly higher on Tuesday after Monday's one day pullback, but there was a sharp dip in the middle of the day that was quickly bought. The Dow, which was both up and down triple digits at different times during the day, closed at +60-points. The S&P 500 was basically flat but small caps jumped again as they continue to lead on the upside. The I-fund was up as the dollar fell, and bonds were down slightly after a successful test of the November lows.

Daily TSP Funds Return


There weren't any major economic reports released yesterday but the economic growth trades were the ones working best yesterday. And of course that trade is feeding off of the stimulus and the potential for more, which is what has been sending the dollar down for months, and when the dollar is down we see prices go up. Small caps have certainly benefited, as has prices in commodities. Oil is not only up on that weak dollar, but investors are also betting on increased demand in 2021. It broke through the top of its channel this week.




Economic strength also tends to lift bond yields (bond prices falling) but yesterday there was a possible negative reversal as the yield on the 10-year shot up over 1.18% at one point before pulling back and closing at 1.14%.




BND (bonds / F-fund) saw a positive reversal after it successfully tested the October lows.




The question is, does that negative reversal in yields / positive reversal in bonds, indicate anything negative about the economy from the bond traders? With the yield on the 10-year reading near the March highs, when stocks were plummeting, what does that say about the current environment?




I wish I knew a bond trader to pick their brains about this. I know yields tend to go up when the economy is growing, or when inflation is moving up. What would a double top pullback in yields do to the stock market?

Next Monday is MLK Jr.'s Day and here is the seasonality chart surrounding that holiday. That's quite a bit of red for a month that is fairly green in general.


Chart provided courtesy of www.sentimentrader.com






The S&P 500 (C-fund) slipped back into the rising trading channel during yesterday's midday selling, but by the close it had crawled back above that resistance line. That is now three days above resistance and surprisingly strong action for an index that should be running out of steam at some point here.




The DWCPF (small caps / S-fund) isn't running out of steam, but it probably should be. Not only is it up over 100% since last March's lows, but it has now gone up up 35% just since the low before the election.




The EFA (I-fund) was up with the dollar down on the day. The trading channel is still holding.




The dollar took a pretty big hit yesterday after the solid three day rally.




The Transportation Index, another that is quite sensitive to economic activity, was up sharply yesterday, making a new high. The Dow Theorists would suggest that this is a good sign for the broader stock market.




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

For more info our other premium services, please go here... www.tsptalk.com/premiums.html

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

Tom Crowley




Posted daily at www.tsptalk.com/comments.php

The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.

Submit "TSP Talk: Bulls fight right back" to Digg Submit "TSP Talk: Bulls fight right back" to del.icio.us Submit "TSP Talk: Bulls fight right back" to StumbleUpon Submit "TSP Talk: Bulls fight right back" to Google

Comments


SPY (C Fund) (delayed)

(Stockcharts.com Real-time)
DWCPF (S Fund) (delayed)

(Stockcharts.com Real-time)
EFA (I Fund) (delayed)

(Stockcharts.com Real-time)
BND (F Fund) (delayed)

(Stockcharts.com Real-time)

Yahoo Finance Realtime TSP Fund Tracking Index Quotes