The S&P 500 closed higher this week at 4697, just shy of its 4704 record that was set on Tuesday. Despite last weeks hot inflation report, third quarter retail sales came in with a better-than-expected rise of 1.7%, buoyed by strong consumer spending as we move into the holiday season. The markets also showed resilience despite European shutdowns due to increases in COVID cases. Finally, with earnings season drawing to a close, 81% of S&P 500 companies reporting earnings have beat expectations and on track to grow annual profits by over 40%. From a technical perspective, last week I mentioned that the S&P 500 Bollinger Band Index (BBI) stood at a tame reading of 56, down from the 2 November reading of 90. Well this week the BBI closed even lower, at 43. When you combine a tame BBI with the S&P 500 making new highs, you have the Let the trend be our friend conditions in place for continued bullishness and hopefully a year-end rally. Next week the President will announce his pick for the Federal Reserve Chair and the last Fed meeting minutes will be released. However, we dont expect these events to have much of an impact as volume will start to decrease on Wednesday through Friday due to the Thanksgiving holiday. For TSP TIPS we are starting to see a little bit of a separation between the C and S funds as follows. 1) The C fund made two new highs on Tuesday and Thursday while the S fund did not. 2) The C fund remains within 1% of Thursdays high while the S fund fell outside the 2.5% window from its previous high. 3) While both funds have an A Performance Ranking, the C fund remains above its short-term Moving Average (MA) while the S fund has dropped below. Based on those three differential items (3 X 5%), we recommend the following reallocation. Lastly, we wish all our TSP TIPS subscribers a very Happy Thanksgiving!!
The S&P 500 closed higher this week at 4697, just shy of its 4704 record that was set on Tuesday. Despite last weeks hot inflation report, third quarter retail sales came in with a better-than-expected rise of 1.7%, buoyed by strong consumer spending as we move into the holiday season. The markets also showed resilience despite European shutdowns due to increases in COVID cases. Finally, with earnings season drawing to a close, 81% of S&P 500 companies reporting earnings have beat expectations and on track to grow annual profits by over 40%. From a technical perspective, last week I mentioned that the S&P 500 Bollinger Band Index (BBI) stood at a tame reading of 56, down from the 2 November reading of 90. Well this week the BBI closed even lower, at 43. When you combine a tame BBI with the S&P 500 making new highs, you have the Let the trend be our friend conditions in place for continued bullishness and hopefully a year-end rally. Next week the President will announce his pick for the Federal Reserve Chair and the last Fed meeting minutes will be released. However, we dont expect these events to have much of an impact as volume will start to decrease on Wednesday through Friday due to the Thanksgiving holiday. For TSP TIPS we are starting to see a little bit of a separation between the C and S funds as follows. 1) The C fund made two new highs on Tuesday and Thursday while the S fund did not. 2) The C fund remains within 1% of Thursdays high while the S fund fell outside the 2.5% window from its previous high. 3) While both funds have an A Performance Ranking, the C fund remains above its short-term Moving Average (MA) while the S fund has dropped below. Based on those three differential items (3 X 5%), we recommend the following reallocation. Lastly, we wish all our TSP TIPS subscribers a very Happy Thanksgiving!!