This week will likely be viewed in hindsight as a pivotal week for this rally.  Volatility has returned along with some bigger price swings.  Some VERY strong earnings numbers came out Thursday night for Google, Amazon, Intel and Microsoft.  This led to a huge day for the market on Friday.  Since tech companies make up a big share of the broad indexes, breakouts in these companies will drive the broader market higher in the short run.  The important thing to see in the charts below is that Friday’s big move up in these companies came after consolidation.  Friday marks the beginning of a move up for these companies, not a final gasp.  

Here’s a 2 year, weekly chart of Amazon.  You can see that AMZN has been in a sideways consolidation at around 1000 for the past 5 months.  Friday’s breakout is very likely the beginning of a new leg up for AMZN.

Intel was in a year long consolidation that ended in September when it finally broke out and closed above 37.  Friday’s big move just solidified the rally for INTC.

What does all this mean for the TSP funds?  It means I would not bet against this market right now.  In the long run, we are in the 5th leg up in the rally that began in 2009.  Eventually this market will roll over but, with breakouts like we saw on Friday, I don’t think it’s happening soon…  * When it does roll over however, it will NOT be pretty…*

Post questions to comments and have a great week!

Jerry

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