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Stocks sink again

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Stocks resumed their downside slide on Tuesday as the Dow shed another 470-points and it took a late push higher to take it off the 548-point loss it had with about 5 minutes left in the day. Oil also fell and there seems to be a strong correlation lately with the price of oil, as well as the problems in Asia.

Volume was up but lighter than you might expect on a day like yesterday, but it is the last week of summer - as far as pre-Labor Day goes - and there should be a lot of Wall Street folks on vacation. Also, Wednesday will be the last trading day of the week in China because of a holiday over there on Thursday and Friday, and that could make things interesting in the U.S. taking that catalyst off the table for a few days.

On Friday morning we get the August jobs report and estimates are looking for a gain of 217,000 jobs, and an unemployment rate of 5.2%. The Jobs Report Contest is open in the forum. Click here for more information.

Daily TSP Funds Return

The stock funds each lost 2.6% or more while bonds had a big day on the loss in the stock market.

The SPY (S&P 500 / C-fund) gapped (red) open lower Tuesday, which actually filled a very small gap (blue) left open from last Thursday morning. Clearly a troubling chart and there could be more damage, but we also know the bounce off the lows will likely be quite strong. That said, the futures are up about 1% as I write this Tuesday evening. So the question is, from what level will the bounce start? We could see a successful test or we could see a lower low, so there are no easy answers. If you like bargains, we're in that neighborhood now, but that doesn't mean stocks won't get cheaper in the days ahead. Too bad we can't nibble on stocks in our TSP accounts. We basically get up to two opportunities to buy if you do it in pieces instead of all at once. After that you can only move to the G-fund.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk


The Dow Completion Index (S-Fund) has filled a couple of gaps during this mess (blue) but there are still a couple of gaps open. Both happen to be above the current level and will almost certainly get filled, but we don't know how much damage may or may not be done in the interim.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk


The Nasdaq was the first to test overhead resistance and so far it was a resounding failure.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk


The EFA (EAFE Index / I-fund) also failed and is now deep into bear market territory. There is a large gap overhead and in the short-term that could get filled, but like the Transportation Index, which has been in a bear market for months, rallies should fail.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk


The Japanese Nikkei, which is a good piece of our I-fund, has fallen over 13% from the early August highs, and it looks like it may continue to test last week's lows.


Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk


The
AGG (bonds / F-fund) was up Tuesday taking advantage of the losses in the stock market. A bit of a safety play, but I would have expected bonds to do better in the last week with the market down as sharply as it has been. That could mean there is trouble brewing in the bond market.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk



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Thanks for reading. We'll see you back here tomorrow.

Tom Crowley


Posted daily at www.tsptalk.com/comments.php

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Comments

  1. uscfanhawaii's Avatar
    So how does the Seasonality Chart look around the Labor Day Holiday? Looking at Sept, the 4th day is down...can that be the approx Fri before the holiday?
  2. tsptalk's Avatar
    I've avoided posting it because right now, emotions are in charge. I don't think the holiday effect helps.

    But, for those who want to know... today and Friday are the best days. Thursday and all of next week are below average.
  3. EmoDx's Avatar
    The 1 year chart of $DWCPF shows a 20OCT14 gap at 978.15. The three year chart of EFA shows a small open gap (55.70 - 55.74) between 10JUL13 and 30AUG14. I am gonna pull the trigger and leg into positions if we fall into those gaps.
  4. uscfanhawaii's Avatar
    Quote Originally Posted by tsptalk
    I've avoided posting it because right now, emotions are in charge. I don't think the holiday effect helps.

    But, for those who want to know... today and Friday are the best days. Thursday and all of next week are below average.
    Thanks for the info. I went ahead and switched to G and F Wednesday. It definitely felt weird moving almost $1MM out of equities and locking in a 9% loss, but the similarities with 2008 are uncanny. And that one still smarts.

S&P500 (C Fund) (delayed)

(Stockcharts.com Real-time)
DWCPF (S Fund) (delayed)

(Stockcharts.com Real-time)
EFA (I Fund) (delayed)

(Stockcharts.com Real-time)
BND (F Fund) (delayed)

(Stockcharts.com Real-time)

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