TSP Weekly Wrap-Up – Tis the Season

Seasonality becomes a big factor

(I don’t know why this formats the way it does. Please bear with me. Thanks)

Stocks started last week on a down note, continuing the pullback from the recent highs. But by the end of the week the market began to rebound and most of the stock indexes finished higher for the week.

For the TSP, the C-fund added 0.10% last week, the S-fund gained 0.81%, and the I-fund slipped 0.28% as, although the dollar started to pull back, it did finish higher on the week, and a higher dollar negatively affects the I-fund. Bonds (F-fund) lost 0.25%, and the G-fund picked up 0.04%.

For month, the C-fund is now up 1.56%, the S-fund has gained 2.90%, and the I-fund holds onto a 0.79% gain. The F-fund is now down 0.75% in November, while the G-fund is up 0.11%.

The S&P 500, as well as most major U.S. stock indices, found support at the 50-day exponential moving average (EMA) last week, and we saw a pretty good sized rebound off of that area. The upside breakout above the short-term descending resistance line (line D) is a good sign that the recent pullback may be over.

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

As long as the rising support line “A” holds, the S&P should continue to its ascending move toward the recent highs. I can foresee the old support line “B” possibly acting as resistance on the way back up, but with the parallel channels A, B, and C all moving higher, the trend remains up.

If you see the S&P 500 move below line A, it will be a big warning sign for us, so watch for that. Any close below 1180 will get my attention.

The last two months of the year are quite strong historically, but it can also be very rocky. In other words, if the market can stays true to its historical seasonal patterns, we should see gains between now and the end of the year. But in that time we will likely see some volatile activity.

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

You can see that the average max losses were not benign, but what this tells me is that we may have some good opportunities to buy any dips. We just had one of those pullbacks and it looks like it may have been a good buying opportunity. I’m guessing we may get another chance sometime after Thanksgiving.

This chart from one of my favorite websites, SentimenTrader.com, contains 55 years of data from 1950 to 2004. You can see that historically, the best days to be in the stock market funds this week is the Wednesday before, and the Friday after, Thanksgiving Day. But after the holiday weekend, things get more dicey.

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

Early to mid-December is an average at best time for the market historically, while the last couple of weeks in December are usually very strong. Again, this sets up some possible good opportunities, whether you are looking to buy low, or sell high.

Good luck, and thanks for reading. We will be back here next week with another
TSP Wrap Up.

Tom Crowley


Weekly Wrap-Ups Archive

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