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TSP Talk: Turnaround Tuesday made an attempt

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Stocks were mixed on a day that saw the bears show some teeth in the morning, and really push on the small caps and Nasdaq stocks, but there was some turnaround Tuesday action as the indices closed well off the lows, with the Dow (+195) and S&P 500 (+8) closing in positive territory after moderate early losses. The holiday seasonality is in the air after a rough start to the normally bullish week for stocks. Bonds were down, yields were up, and the dollar was relatively flat.


Daily TSP Funds Return
The Dow Transports rallied 0.81% and closed just off its November 2nd all time closing high, so there were pockets of decent strength. Internally the declining issues modestly outpaced the advancers, but volume on the NYSE was positive. Another 500+ new lows for the Nasdaq, and with the index still just off recent highs, this is still a red flag.




It wouldn't be typical for stocks to sell off in the next two trading days surrounding Thanksgiving Day, but the days after Thanksgiving weekend don't have the best record. However, that could be because of the gains during the prior (which is this week), something we are not seeing much of yet.


Chart provided courtesy of www.sentimentrader.com


The next two days could be very interesting with the strong bullish bias. There's also that plethora of economic data being released today (Wednesday) - basically all of the data that we would normal see from Wednesday through Friday, gets released today, and that could certainly shake things up in an environment that can't decide if inflation is a serious, or transitory, problem.

The 10-year yield moved higher yesterday and is nearing the October highs after the sharp move lower late last week. This sent bond funds, including our F-fund, to their lowest levels since early June.




The market is open for a half day of trading on Friday. I know many of you will be busy with family and won't be paying too much attention to the market on Friday, so I will post a just brief commentary to check in.

From tsp.gov: Holiday Closing: Some financial markets will be closed on Thursday, November 25 in observance of the Thanksgiving Day holiday. The Thrift Savings Plan will also be closed. Transactions that would have been processed Thursday night (November 25) will be processed Friday night (November 26), at Friday's closing share prices.




The S&P 500 (C-fund) was down sharply early on Tuesday but it rebounded and put in a decent positive reversal - similar to Monday's peak reversal. That means we should see some upside at some point on Wednesday, but as the day wears on, that reversal advantage losing some steam. This looks like a potential "F" flag (blue) and F flags can grind higher for days or even weeks, but when they break, they typically break down. 2021 hasn't been a typical year so I don't know if we should expect "the typical." I think volatility will pick up steam in the coming months and the bullish seasonality will meet a market that seems to want to pull back, and it could be a battle.




The DWCPF (S-fund) was down again but it closed well off the lows and finished with a bullish looking reversal pattern. It is fairly oversold in the short-term so we should see some kind of bounce, but it could be a bounce that needs to be sold. Early December can be squirrely as we've seen some very strong early Decembers, and some clunkers over the last few years.




The EFA (I-fund) was down and the late rally in the U.S. means it got under priced and may need adjusting on Wednesday.  You can see what the recent rally in the dollar is doing to this fund.  If we can figure out when the dollar is going to peak, this might be a fund to play with.




BND (Bonds / F-fund) broke down from the head and shoulders pattern yesterday, as H&S patterns tend to do. The right shoulder wasn't very developed so it wouldn't be too surprising to see a snap back rally to fill some gaps, but that doesn't mean the breakdown wouldn't resume if that happened. I just think bonds are dangerous in an environment where the Fed is getting pressure to rate interest rates.




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Thanks for reading. Have a Happy Thanksgiving. I will post a brief commentary on Friday.

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.

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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