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| Today's Commentary (Short Term Outlook) |
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Momentum Stocks continued their winning ways on Friday as the Dow picked another 70-points on the day, closing out another strong week for U.S. stocks. For the TSP the C-fund was up 0.71% on Friday, the S-fund gained 1.08%, and the I-fund jumped 1.18%. The F-fund fell 0.15%. The I-fund was the only stock fund to close down for the week. For more on the weekly and monthly returns, please see our TSP Weekly Wrap-up. The S&P 500 is still bouncing along the short and longer-term ascending overhead resistance, and while there is a lot more room on the downside of the trading channels, the momentum is tough to fight. This is a freight train with a lot of weight behind it, and the chances of it just stopping and reversing course are probably not good. About the best those of us who are waiting for a decent buying opportunity could hope for is a slowdown so we can jump on.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Last week I described it as a boat leaving the dock without us. This week a runaway freight train. Can you tell I'm running out of ways to say this market has momentum and I'm missing it? Unfortunately, trying to jump on a boat that has already left the dock, or a moving freight train is not something I can recommend. On Friday we talked about the mixed sentiment picture, so I won't go there again. We also talked about the market being overbought, but not at an extreme. The dollar has been rallying the last week or so, which has given the I-fund some trouble compared to U.S. stocks. As I mentioned above, the I-fund was down over 1% last week, while the C and S funds saw decent gains.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The trend remains up for the dollar, but at 81.41, you can see it is sitting near the middle of that large ascending trading channel. It could go either way so it is tough to make a call on the I-fund. It seems that the dollar moves higher each time bad news slips out of Greece (sorry,  ).
The 10-year T-note has not yet filled our target gap near 3.68%, and yields actually jumped up on Friday, opening up a new gap, and at the same time it broke above the descending trading channel, which could actually be a break in a bull flag (which would be bullish for yields).  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk It will be very interesting to watch bonds this week to see if yields will continue their pullback from the 4% level, or if this break in the channel (or bull flag) means they will start heading back toward 4%. They may be due for a bounce after the three week decline. Remember, bond prices and the F-fund go down, when yields move up. Those in the stock funds must be enjoying every minute of this relentless rally, which is showing no signs of wanting to stop. For the sake of those looking to buy dips, and for me - looking for something a little more exciting to write about - I hope we see a little more volatility as we head into the last week of April. And speaking of the end of April - have you ever heard the old axiom, sell in May and go away? The end of April brings an end to the stronger 6-month period of the year for stocks and starts the historically weaker 6-months period of May through October. Thanks for reading. We'll see you back here tomorrow! Tom Crowley |