The S&P 500 broke its streak of nine consecutive up weeks and closed Friday at 4697. The last trading day of 2023 was a down day, and Tuesday, the first trading day of 2024, wasnt pretty as the S&P 500 gapped down at the open and remained there to the markets close. Wednesday was a repeat as the S&P 500 again gapped to the downside at the open. We did have a slight upward bounce when the Fed minutes were published in the afternoon but that quickly faded. Wednesday also marked the last day of the Santa Claus rally period but the Grinch appeared and took that rally away. Thursday was another down day, making it four down days in a row. Before Fridays open the Payroll/Unemployment report came out just above expectations and the markets finally had an up day, but down for the week and breaking that streak of nine. Friday also marked the fourth day of the First Five Trading Days indicator that was mentioned in last weeks update. Given this weeks performance, its going to take about a 1.5% gain on Monday to get into positive territory. Looking back, the last time this indicator was negative was the first five days of 2022, and the markets had double digit losses for the year. Since 1950, when it was down over the first five days, it recorded an average annual return of 0.3%. But then again, you look back to last weeks report and our comments about the S&P 500s greater the 10% gains in November/December and their annual returns. It appears as if these two signals are crossed, but lets look at technical analysis. Just last week (December 28), the S&P 500 came within four points of making a new record closing high while having nine straight weeks of gains. While we did have a sell off this week, none of the daily losses were greater than one percent. Additionally, the S&P 500 has now returned to the mid-point of the Bollinger Bands and is well above Decembers low/support level of 4546. That said, we may see more consolidation over the next few weeks and then hopefully see a breakout to the upside and challenge those record highs again. Looking at next week the big news will be the inflation numbers. For TSP TIPS all individual funds sold off with the C and S funds dropping below their 20 day Moving Averages (MA). As such we are recommending the following investment mix change.
The S&P 500 broke its streak of nine consecutive up weeks and closed Friday at 4697. The last trading day of 2023 was a down day, and Tuesday, the first trading day of 2024, wasnt pretty as the S&P 500 gapped down at the open and remained there to the markets close. Wednesday was a repeat as the S&P 500 again gapped to the downside at the open. We did have a slight upward bounce when the Fed minutes were published in the afternoon but that quickly faded. Wednesday also marked the last day of the Santa Claus rally period but the Grinch appeared and took that rally away. Thursday was another down day, making it four down days in a row. Before Fridays open the Payroll/Unemployment report came out just above expectations and the markets finally had an up day, but down for the week and breaking that streak of nine. Friday also marked the fourth day of the First Five Trading Days indicator that was mentioned in last weeks update. Given this weeks performance, its going to take about a 1.5% gain on Monday to get into positive territory. Looking back, the last time this indicator was negative was the first five days of 2022, and the markets had double digit losses for the year. Since 1950, when it was down over the first five days, it recorded an average annual return of 0.3%. But then again, you look back to last weeks report and our comments about the S&P 500s greater the 10% gains in November/December and their annual returns. It appears as if these two signals are crossed, but lets look at technical analysis. Just last week (December 28), the S&P 500 came within four points of making a new record closing high while having nine straight weeks of gains. While we did have a sell off this week, none of the daily losses were greater than one percent. Additionally, the S&P 500 has now returned to the mid-point of the Bollinger Bands and is well above Decembers low/support level of 4546. That said, we may see more consolidation over the next few weeks and then hopefully see a breakout to the upside and challenge those record highs again. Looking at next week the big news will be the inflation numbers. For TSP TIPS all individual funds sold off with the C and S funds dropping below their 20 day Moving Averages (MA). As such we are recommending the following investment mix change.