TSP Talk 12/01/12

It was another positive week for stocks last week as a dramatic reversal on Wednesday turned what looked like a breakdown into a bullish “outside day” and the indices were able to hang onto those gains through Friday.

Here are the TSP fund returns for the week of November 26 through November 30. All of the funds ended the week, and the month of November, in positive territory. Barring any major damage in December, we should be looking at double digit percentage gains for the year.

With the “fiscal cliff” negotiations in full gear, this has become a headline driven market as investors hang on every word out of Washington. I have to say that I am a little surprised at how resilient stocks have been over the last couple of weeks considering all that is at stake. The news has not been all that great so to contradict what I just said about the headlines, the market seems to be anticipating a positive outcome to this fiasco.

I posted this a couple of weeks ago and it appears that the current action continues to mimic the pattern that we saw last spring – from the break and the positioning of the 20, 50, and 200-day EMAs, to the “V” bottom, the recapturing of the EMA’s, and the PMO buy signal. Should it continue it looks like the trend will be up, but it couled be choppy. That’s perfect for a market timer.

Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

We are now heading into December, one of the strongest months of the year, and historically it has been positive about 75% of the time.

Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

Much of that strength has historically come during the last two weeks of the year, so if there is going to be any turbulence it could happen during the first half of the month. Of course the fiscal cliff negotiations will have its impact so we probably shouldn’t count too much on past data to determine the outcome.

The market is overbought but looks good in general based on the charts and indicators. But what will the next headline will do to the current positive trend?

Good luck, and thanks for reading. We will be back after the weekend with a full market commentary on www.tsptalk.com/comments.html.

Tom Crowley
Weekly Wrap-Ups Archive
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