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TSP Talk Market Commentary 01/10/2020

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Stocks rallied yet gain on Thursday as the melt up that everyone had been talking about, may be here. The Dow gained 212-points or .074%. Small caps lagged a bit closing off their highs, and the dollar was up putting some pressure on the I-fund.

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I thought the fact that everyone was talking about a melt up might keep it from occurring, but how else can we describe what we're seeing? Of course melt-ups can end with a thud, but they can go on for quite a while first - there's no script.

Advancing volume (1.5B) barely edged out declining (1.4B) on the NYSE which is a bit of a negative divergence on a day that saw a 200-point gain in the Dow, but as we've seen for years, it's the bigger names such as Apple, Microsoft and the like, that are outperforming and pushing the indices higher so perhaps we're seeing a stealth consolidation in the internal market, because the indices are not showing any signs of trouble.

A strong 30-year bond auction reversed bond prices higher on Thursday after a weak morning of trading.

The jobs report comes out today and earnings season will be under way in a week or two, so we'll have a few catalysts to deal with.

By the way, that meatless burger stock (BYND) I mocked in Thursday's commentary, was up almost 11% yesterday, so what do I know?

The December Jobs Report estimates are looking for a gain of about 160,000 jobs, and an unemployment rate of 3.5%.

The S&P 500 (C-fund) made a new high and nothing seems to be able to get in the way of the folks doing the buying lately. Who would be buying up here? Program traders? I'm not too sure, but we are seeing analysts raising price targets, as they tend to do after prices have already gone up, and that can be a warning sign.

The DWCPF (S-fund) made a new high but closed off the intraday high - possibly creating a negative reversal day, but it wasn't really a classic reversal pattern. There is a parallel channel still moving higher (red), but we also see a possible wedge pattern (with the blue line) getting squeezed here, and they are more likely to break down.

The EFA / I-fund was up slightly but the rally in the dollar held it back. On Wednesday the TSP gave the I-fund a loss while the EFA was up. They may have given some of that back on Thursday because the 0.38% gain may be generous given the gain in the dollar.

Being that a strong dollar can be a negative catalyst for the I-fund, it's worth keeping an eye on this big bull flag. It's testing the top of the flag now and could decide to test the lower part of it again, but since bull flags tend to break out to the upside, the I-fund could be vulnerable, or at least lag the C and S funds if we do see a breakout here.

The AGG (F-fund / bonds) saw a big positive reversal day after that 30-year bond auction I mentioned above. It had been pulling back from it recent highs all the way down to some rising support and the 50-day EMA near 112.40 but so far that seems to be holding.

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. Have a great weekend!

Tom Crowley

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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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