TSP Talk Blog

The bears kept the pressure on Thursday as stocks opened lower and moved lower all day. The Dow lost 195-points on the day or about 1.1%, despite some good weekly jobs data and Consumer Spending numbers.

Daily TSP Funds Return More returns

Here are the final numbers for April:



Those who have been following the market for some time know 1% moves are not the end of the world, and are actually quite common. The difference these days is that a 1% move in the Dow now means nearly 200-points and that makes it seem worse than it really is. Now, if we ever get a 10% correction, we'll see how folks react. We've averaged a 10% correction about once every 12 months going back decades but we haven't had one for 5 years now. I'm not saying we're seeing the start of one, but if we are, it's not the end of the world.

This chart is a little old but it does show the last 10% correction in 2011...


Source: History of 10%+ Corrections - Business Insider

The SPY (S&P 500 / C-fund) fell below one the the rising support lines but is still clinging above the 50-day EMA. As I've been saying, there are certainly cracks in this market but so far no major breakdowns here yet.


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

The Wilshire 4500 (S-fund) has been one of the casualties of this market pullback as it has now fallen below the 50-day EMA and the bottom of a parallel channel. Those red circles show where it fell below the 50-day EMA earlier this year, but each was of those turned into a buying opportunity and I'm sure we all felt the same way than as we do now... a little nervous about the market.


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

The Dow Transportation Index fell below the 200-day EMA and the key support line near 8600, although it did close back above that support line. This could be the head of a head and shoulders pattern, in which case the right shoulder may want to get formed now. If not, there's some big trouble brewing here.


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

After a false breakout to the upside of a rising wedge, the EFA (EAFE Index / I-fund) has now poked its head below the wedge. There is still a long way to go before it tests its 50-day EMA, which is a double edged sword. Being above the 50-day EMA is a sign of strength and of being in a bull market. On the other hand if it does test that EMA there's a few more percentage points to lose before it gets there.


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

The dollar continues its slide from the March high and that's now 5 closes below the 50-day EMA. That could mean the rallies will be sold, and that means the I-fund may be a good choice for those of you wanting to be in the stock funds.


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

The May seasonality chart kicks in today (Friday.)


Chart provided courtesy of www.sentimentrader.com

The AGG (bonds / F-fund) fell sharply early on Thursday but rallied strongly back to regain the morning losses. There a possible new descending trading channel formed, but that open gap means it may try to test the top of the channel - if it can get back above the 50-day EMA. Bonds look a little dangerous except for some possible short term plays.


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


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Thanks for reading! Have a great weekend!

Tom Crowley


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