While the SP500 (TSP C fund) is closing within 1% of its all-time high for the 16th time this year, the non-SP500 (TSP S fund) remains well below its summer peak and is also approaching overhead resistance. The positive seasonal tendencies of the market are quite strong through the end-of-the-year so a marginal new high for the SP500 is a strong possibility. On the other hand, for the majority of stocks and the TSP S fund it would be quite a feat to reach new highs in the current year.
The non-SP500 index as represented by the VXF ETF and TSP S fund is trading within a sideways price channel it entered in mid-2014. It pushed higher above this channel in late 2014 in a global risk-on surge after the ECB announced its own Quantitative Easing program. Since the August correction, it has re-entered this sideways price channel where the top of the channel is 7% below its summer peak.
The SP500 chart provides the bulls hope since its price channel remains in an upward trend. The SP500 shifted to the lower section of the channel with the August correction and is bumping into overhead resistance in the middle of the channel and also near the level of the summer peaks. It is not a stretch for the SP500 to tag 2150 by the end of the year or about 3% above 18 November’s closing price. The question is the trend sustainable into the new year.
With the global financial cycle turning down, the US market faces significant headwinds. You can guarantee the central bankers want to stop the downturn and will attempt to “do whatever it takes”. The question is will the credit markets listen this time. In the meantime, history shows the US stock market is always last to get the word, so tagging the old peaks is not a big stretch at this point.
Categories: TSP Charts