Last week I alluded that we had the “bases loaded”, and it looks like we drove in a few runs this week. Monday marked the last day of November, and what a month it was. First, the Dow rose 11.8% in November, its best monthly performance since January 1987. Second, the S&P 500 and the Nasdaq climbed 10.8% and 11.8% respectively for their biggest monthly advances since April. And third, the Russell 2000 Small Cap Index had its best month ever gaining more than 18 percent. Not only did this clear the bases, but the scoring continued as we jumped into December. At Friday’s close all four of those indices sat at record levels, with the Dow sitting above that 30,000 threshold and the S&P 500 at 3699, just short of another “century” mark. From a technical perspective we’ll still “Let the trend be our friend”. However, one item that did catch my eye was the Bollinger Band width, which measures volatility. As the index moves towards the top of an expanding band, it is said to be overbought, which puts pressure on the index, which could result in a sell off. As the band narrows, it then takes that selling pressure off, returning it to the norm. Our Bollinger Band Index (BBI) quantifies this volatility, and it stood at a high mark of 140 on 24 November. Since then, that overbought pressure has been released as the BBI now stands at 57. As such, we consider this contributing to sustainment of the bullish market mood. For TSP TIPS, the equity funds (C/S/I) followed suit with all three recording new highs on Friday. The performance ranking shows the S fund at the top of the leaderboard, with both the C and I funds in a virtual tie. We’ll keep watching this but it is just too early in the month to use one of our two monthly allocations for a minor 5 percent shift when we are already 100 percent invested in equities.
Last week I alluded that we had the “bases loaded”, and it looks like we drove in a few runs this week. Monday marked the last day of November, and what a month it was. First, the Dow rose 11.8% in November, its best monthly performance since January 1987. Second, the S&P 500 and the Nasdaq climbed 10.8% and 11.8% respectively for their biggest monthly advances since April. And third, the Russell 2000 Small Cap Index had its best month ever gaining more than 18 percent. Not only did this clear the bases, but the scoring continued as we jumped into December. At Friday’s close all four of those indices sat at record levels, with the Dow sitting above that 30,000 threshold and the S&P 500 at 3699, just short of another “century” mark. From a technical perspective we’ll still “Let the trend be our friend”. However, one item that did catch my eye was the Bollinger Band width, which measures volatility. As the index moves towards the top of an expanding band, it is said to be overbought, which puts pressure on the index, which could result in a sell off. As the band narrows, it then takes that selling pressure off, returning it to the norm. Our Bollinger Band Index (BBI) quantifies this volatility, and it stood at a high mark of 140 on 24 November. Since then, that overbought pressure has been released as the BBI now stands at 57. As such, we consider this contributing to sustainment of the bullish market mood. For TSP TIPS, the equity funds (C/S/I) followed suit with all three recording new highs on Friday. The performance ranking shows the S fund at the top of the leaderboard, with both the C and I funds in a virtual tie. We’ll keep watching this but it is just too early in the month to use one of our two monthly allocations for a minor 5 percent shift when we are already 100 percent invested in equities.