Stocks did not disappoint those expecting the positive seasonality rally during Christmas week. The holiday shortened week produced solid gains with the I-fund leading the way, while bonds and the F-fund were the losers.
Here are the weekly, monthly, and annual TSP fund returns through Friday, December 27…
The S&P 500 (SPY / C-fund) has gone virtually straight up since the FOMC meeting when the Fed announced the start of a modest tapering from their bond buying program. That was not the reaction many investors expected. The trend is clearly up, but overhead resistance is not too far overhead.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Here is the seasonality chart surrounding New Year’s Day. Monday is day # -2 and next Friday is the big +2 day.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
Bonds (F-fund) have been breaking down. We saw a fake-out breakout from the pennant formation on the 20+ year bond ETF, and that has now turned into a breakdown. This is classic technical analysis.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The 7 to 10 year bond ETF (above right) is a classic breakdown from a head and shoulders pattern. The charts look awful for bonds, but bond market sentiment is so bearish that it wouldn’t be a surprise if we get a short term relief rally.
Good luck, and thanks for reading. We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at http://www.tsptalk.com/comments.html.
Tom Crowley
www.tsptalk.com
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The legal stuff: This information is for educational purposes only! This is not advice or are commendation. 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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