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TSP Talk: There they go again!

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Turnaround Tuesday's reversal saw a big follow through to the upside on Wednesday, as the chartists would hope, but the day didn't start out positive. The negative open started to get bought within about 30 minutes into the trading day, and from there the bullish snowball grew. The Dow ended the day with a 435-point gain, and the major indices all picked up 1% or more on the day.

Daily TSP Funds Return

There they go again. Those short squeeze stocks like Gamestop, Express, and AMC exploded again so the momentum chasers found their next move. How long it lasts this time is anyone's guess, but I know if traders aren't very careful, they're likely to get burned again.

There's no reason for me to post this except for entertainment purposes, but here is a partial intraday / after hours chart of Gamestop (GME) yesterday. It opened the day at 44.70 yesterday, and closed at 91.71 for a gain of a whopping 104% on the day. Trading was halted a couple of times but after hours it didn't stop. It hit $200 less than an hour after the bell rang, and traded wildly for hours afterward.

The last time these short-squeeze stocks fell apart, the entire market came down with it. Whether it was the dog wagging the tail or the other way around, I don't know, but it should increase volatility which will make the market more vulnerable.

So, as I said yesterday, enjoy the probable move to new highs in the indices, but don't get too comfortable.

The charts look good, but mind those resistance lines, and keep watching things like bitcoin, the 10-year bond yield, and the price of oil for any signs that the momentum traders are getting ready to take profits, which could put the breaks on the rally.

The S&P 500 (C-fund) seems to have cemented in a low for this pullback after the Turnaround Tuesday reversal, and the big rally on Wednesday. There's not much in the way now to the top of that channel again. Of course nothing is guaranteed, but that's what the chart sees right now. What the bulls would probably like to see now here is a more quiet move higher, keeping volatility lower. Unfortunately those Gamestoppers may keep traders moving quickly, and investors more fidgety.

The DWCPF (small caps / S-fund) added 1.3% yesterday which nearly got back Monday's losses, but not quite. As we talked about yesterday, sometimes small caps play catch up to the large caps after reversals. There's some room to run here.

The EFA (I-fund) was up, but not quite to the extend of U.S. stocks, and that may have been a timing thing as U.S. stocks opened lower before rallying, and the overseas markets were starting to close about that time.

The Dollar rallied early and flipped over in a mirror - opposite - move to the stock indices. The early rally failed at the head and shoulders neckline, and I still see a downside target of about 24.10 - 24.15.

The weak dollar continues to send commodity price higher. Oil has jumped above the top of its trading channel this week, so it is getting quite extended, but clearly bullish action. Copper is starting to get parabolic. Seeing prices jump like this brings up the inflation concerns again, but Fed Chairman Jerome Powell said he is not worried about it.

The BND (bonds / F-fund) was down but it had a nice reversal day, and may be ready for an oversold rebound, but it got itself stuck below some old support that could turn into resistance.

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

Tom Crowley

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