We started the week coming off the jobs report that triggered a big rally the Friday before. The stock market digested those gains for a couple of days and by the open on Wednesday it looked like we may see a bit of a pullback. But then the Janet Yellen confirmation hearings started, and the woman in line to become the chairman of the Federal Reserve was telling investors just what they wanted to hear. That is, that the easy money will continue to come their way until there is more evidence of a stronger economic recovery and jobs market.
Here are the weekly, monthly, and annual TSP fund returns through Friday, November 15…
The S&P 500 (SPY) made news highs during the week, and even jumped over a rising wedge resistance line on Friday. This looks a little frothy and we could be due for a least a pause, but the bulls have been in charge all year and as long as they believe quantitative easing is going to continue, they may not put on the breaks. But Ben Bernanke’s term does not end until January 31, 2014, and if he and the rest of the Federal Reserve decide to start QE tapering before that, there could be a shock to the market.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
On the daily chart, the S&P 500 index itself (not the SPY above) is now 160-points above its 200-day EMA, or 9.8%. That’s quite steep and investors are starting to turn very bullish, which was not always the case during this year’s rally. That’s actually a bearish sign at extremes.
This weekly chart shows that the current bull market is closing in on 5 years old, at 4 years and about 9 months. By comparison, the prior two bull markets each lasted about 5 years before the bubbles burst. Are we closing in on the next bubble bursting?
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds had a good week but it looks more like a relief rally in a downtrend, and now that the open gap was filled, we could see the downside resume this week in bonds.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
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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