TSP Talk Blog

Stocks were mostly higher on Monday although the Dow did suffer a 62-point loss. There was an odd spike lower at about 3:00 PM ET and I really didn't hear what caused it. It could have been a shake out to get weaker bulls to sell, similar to what may have happened last week with bitcoin, which bounced back big today, but that's just speculation. Basically a nice day for stocks as we jump into this big earnings week. Oh, and we saw new closing highs for the S&P 500 and Nasdaq.

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Internally the numbers were good as well, and we saw a lot of "risk on" trades working like AMC (up 13%) and Gamestop which was up 12% yesterday, and another 12% after hours. It almost feels like investors and traders are just looking for the next hot stock / big mover, rather than looking for valuations and solid investments. Last week's tax hike "scare" seems to be a distant memory, and the rally in bitcoin over the last two days, up $8000, is a good example of that. It could be the signs of complacency, but you never know when momentum like this is going to end.

Another sign of complacency that I heard yesterday was that the S&P 500 has been within 5% of its all time highs for 119 straight days, and 97% of stocks in the index are above their 200-day moving average. The conclusion of this commentator was that it can't stay this easy for too much longer.

Bond yields were up and the dollar was flat, and for some reason the VIX was up, and that may have had something to do with that strange sell off at 3 PM, although the VIX was actually up most of the day, so maybe something is cooking under the surface?

Tesla reported earnings after the bell yesterday and was down modestly in after hours trading. Google reports today and the week is filled with big tech names that could move the market like Amazon, Microsoft, Apple, and Facebook.

There is an FOMC meeting this week as well, today and tomorrow, but no changes are expected, and there will be no press conference afterward, but we know any changes to the policy statement could trigger some volatility in the market.

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The S&P 500 (C-fund) did make a new all time high... again and the bulls seem to be in charge despite the choppy action near this recent peak. There's still a lot of resistance just above, but much of it is rising along with the index. The FAANG type stocks start reporting this week and it could be the catalyst for the next breakout, or a long awaited pullback.




The DWCPF (S-fund) did very well again and has pushed through a couple of levels of resistance in the last two days. We do have the possibility of a double top pullback as it reaches for those February highs.




Of course the S-fund is our small caps fund, but unlike the Russell 2000, it also contains mid cap sized stocks so it is not exactly the same stocks as in the Russell 2000 Small Caps Index. But I am finding that chart very intriguing, as I mentioned yesterday. It will be interesting to see if that 230 area acts as resistance, which would kind of cap off the head and shoulders, or what I called, the "mothman" pattern.




The EFA (I-fund) was up slightly and the dollar was flat. It looks like Thursday's gain in the I-fund was well above the EFA return so it seems to be paying some of that back in the last two days.




The Dow Transportation Index put in yet another negative reversal day. Several of them preceded down days the following day, but other than that, it's kind of unusual to see this bounce back repeatedly from those negative set ups.




BND (F-fund) was down and remains in the rising channel, and it is still above the 50-day EMA after last week's break out. There was a slight breakdown in that small wedge formation under the blue line that could be hinting at a test of the lower end of that red channel.




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

Tom Crowley



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