TSP Talk – 11/24/12

Holiday weeks tend to have a positive bias, but what we saw last week was not typical. We saw big gains with nearly 4% returns in each of the TSP stock funds. The question now of course is, what will a post-holiday market look like?

The general rule – which in the stock market is not set in stone – is that pre-holiday action tends to reverse the larger trend the market is in (which since October has been down). After the holiday, that action reverses and the larger trend continues.

If that is the case this time, it would be a troublesome situation for the stock market and our stock funds this coming week. But there are some reasons to believe “it is different this time” – something I am usually reluctant to say. It’s rarely “different this time” so the market is going to have to prove something to me this week by moving above the 50-day EMA, and break the recent descending trend that started in October.


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

I will get more into the the details in my daily commentary on Monday, but the bottom line for this week is determining if last week’s action was just a temporary relief rally that was assisted by the positive bias of pre-holiday trading, and is now facing overhead resistance. Or was last week’s low a bottom and we are about to see the resumption of the larger trend that started in November of 2011? Stay tuned.

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
www.tsptalk.com
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