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TSP Talk Market Commentary 12/30/19

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Stocks were mixed on Friday after a choppy session which saw an opening rally fade, bounce back, then fade again into the final hour of trading creating some possible reversal patterns, but in this type of environment, technical analysis isn't quite as effective. The Dow gained 24-points, the S&P 500 was flat, the small caps were down moderately, and the I-fund had a big day as the dollar fell sharply. Bonds were up.

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After a series of disappointing Decembers in recent years, 2019 was has been an almost a perfect Santa Claus rally, and it actually officially rolls into the first two days of the New Year.

Come January we could see some rebalancing in managed fund accounts as stocks dramatically outperformed bonds and that could get readjusted by pension funds and money managers to put them more inline with their target allocations for the new year.

As great as 2019 has been, don't forget that we entered the year on the heals of the late 2018 bear market, so the bar was low entering the year, and despite the gains near 30% in 2019, the S&P 500 is actually only up 10% since August of 2018 highs, and 13% since the January 2018 high, or 23 months, which is an annualized return of only about 6.5%.

The good news there is, the last two years has been a long consolidation from where the charts recently broke, and that may be a good starting point for future gains, but the recent 3-month rally may need to take a short-term break first.

The action both last week and this week are difficult to assess technically because of the seasonal bias, light volume, tax implications, etc., plus I don't know how many of you are reading this during this during the long holiday break, so again I'll be keeping it on the brief side.

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The S&P 500 (C-fund) made a new high with that fractional gain, but it closed well off the highs creating a possible negative reversal, but due to the time of year and the light volume, we can't really count on normal technical patterns to work. It it pushing near the top end of that rising trading channel.

The weekly chart is getting a little parabolic, similar to that late 2017 / 2018 angle of incline, which of course was not sustainable.

The DWCPF (S-fund) posted a negative reversal day, and an outside reversal day as well, which is a little more bearish and perhaps a reversal pattern, but again, the light volume may mean it is not as meaningful. It could be a warning sign, but a high volume reversal would have meant more to chart technicians.

The EFA (I-fund) had a big day thanks to a 0.50% drop in the dollar on Friday. It made a new high, but also closed off the highs - potentially being a false breakout reversal.

The dollar tanked on Friday but it is now testing the support from the bottom of that large wedge-like formation. That's a big open gap now overhead, which may be the path of least resistance in the short-term.

The AGG (F-fund / bonds) had a nice day and it looks like the TSP gave it a little extra (+0.21%) after Thursday's seemingly low price that they posted. It has broken out of that bull flag, but in the short-term that open gap could get filled.

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:

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

Tom Crowley

Posted daily at

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)

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DWCPF (S Fund) (delayed)

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EFA (I Fund) (delayed)

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AGG (F Fund) (delayed)

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