Relentless
                         
Stocks continue to sneak higher and despite the very minute moves, we are again seeing new highs in the S&P 500.  The Dow gained 20-points but the Nasdaq and Dow Transports were down.
                                  
For the TSP, the C-fund added 0.08%, the S-fund fell 0.22%, the I-fund gained 0.29%, and the F-fund (bonds) dropped 0.51%.  

The S&P 500 is what it is.  It is slowly moving higher.  Eventually something is going to give, but when, which direction, and how much?  With low interest rates and QE2 still spewing, there seems to be a cushion under stocks.

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

Other than that, I don't really have anything new to show you.  The story remains the same as the battle continues between the strong seasonality and positive momentum vs. a stretched market and overly bullish sentiment.  And we have a front row seat.

I will keep the end of year / beginning of year data below, but first I want to mention that the TSP website is showing conflicting information.

One page says this:
Friday, December 31, 2010: The Thrift Savings Plan will be closed on Friday, December 31st in observance of New Year's Day. Transactions that would have been processed Friday night (December 31st) will be processed Monday night (January 3rd), at Monday's closing share prices.

Another says this:
December 31 – Because the stock and bond markets will be open on December 31, the TSP will process transactions. However, since December 31 is a Federal holiday, the TSP call centers will be closed. In addition, participants will not be able to allocate or transfer money into the L 2010 Fund starting at 12:00 noon on Friday, December 31, 2010. On Friday night, the L 2010 Fund will retire, and all money in the L 2010 Fund will be moved into the L Income Fund.
                       
The thought of having the last day of 2010's returns being moved into the 2011 return does seem strange to me, so I assume they will be taking transactions and posting a share price for Friday 12/31. 

Strong seasonality and positive momentum are up against overly bullish sentiment and stretched market indices...
                               
                                Chart provided courtesy of www.sentimentrader.com

Here is a chart I have been keeping of the final 2 trading days of the year, plus the first 3 of the new year.  As you can see, over the last 14 years we have had some big positive gains during that 5-day period, and some big negative declines as well, so the volatility is certainly present, but overall the odds do favor the bulls as 9 of the last 14 five day periods, ended with gains.

SentimenTrader.com took it further, as they normally do, and broke down the data based on only the trading days between Christmas and New Year's during a strong market year, and a recent rally into Christmas...

[The follow chart] shows how the S&P 500 fared from Christmas through year-end when it had been up at least 10% over the past year and at least 3% over the past month.

                             
                              Chart provided courtesy of www.sentimentrader.com

Only 1 negative week out of 12 since 1951 under similar circumstances, and the gains were only modest; just like what we have been seeing over the last week or so. 

Now, what happens after New Year's weekend is another story.  I will look into it.

Thanks for reading!  We'll see you tomorrow.

Tom Crowley

Administrative Note:  One of our long time forum members, Intrepid_Trader, will be starting a new Premium Service here on TSP Talk.  Intrepid developed his own trading system and has had very good success over the years trading his TSP account, and IRA accounts, and has been consistently near the top of our AutoTracker. 

We are offering a free trial to the service for the next several weeks.  You just need to create a login and password in the premium services area (if you don't already have one.)  No payment information is needed.  Just create an account.  Sign in, and you will have immediate access to Interpid Trader's Investment Strategies Reports. 

The reports will be available by 10:30 AM ET each morning, but his active system signals are not always known until 11:00 AM to 11:30 AM ET, so could see multiple updates on some mornings.  Because of this, you may want to either get into the habit of checking the reports each morning after 11:30 AM ET, and/or sign up for the Intrepid trader email alerts. 

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