TSP Talk Blog

Stocks initially rejoiced at the weaker than expected jobs report on Friday morning. However, the higher opening was quickly sold as investors tried to make sense of the situation as we headed in a long holiday weekend. Volume was light for a day with this kind of important report, but that's the nature of the trading day before Labor Day weekend. The Dow ended the day up 73-points, which was about half-way between the day's high and low.

Daily TSP Funds Return More returns

The Jobs Report showed that 151,000 jobs were added in August, which was about 30,000 or so fewer than expected, but it may have actually have been a perfect number for the market. It was low enough that it could be what keeps the Fed's from raising rates later this month, but it was high enough that talking about the death of the economy is certainly premature. One problem I have is how they can revise these numbers and in the back of my mind I wonder how legit the numbers are being so close to the election, bit for now the market seemed to like it. The unemployment rate came in at 4.9%.

Volume probably won't go back to normal right away. This week tends to be a little slow as well, and not until next week should we see volume pick up.

If you are one of us and like to try to time the market, all we need to know is what the market is doing now, or looks like it is going to do. Anytime the market is near the highs like it is now, there will be doubters, and then there are the buy and holders who feel so very smart.

The TSP now has a Facebook page and I was reading some of the comments posted. Some were complaining about the limited transfers we are allowed while other think those who move their money around are foolish. Like I said, when stocks are near all-time highs those buy and holders look like geniuses.

We could do well or poorly trying to time the market but there's one guarantee... If stocks lose 40% or more like they did during the 2008 or 2000 bear markets, the buy and holders will definitely lose 40% or more of the balance they have in stocks. Diversifying can help cushion the blow, but the losses will be profound for them during bear markets. People who are not market savvy really don't have much choice but to buy and hold or stay out of stocks all together and that must be frustrating... unless they can find someone or something to help them.


The S&P 500 (C-Fund) popped back above the 20-day EMA and seems to have found support at the bottom of the trading channel and the 50-day EMA. A move to the top of the channel seems like a logical assumption for the near future, although some small open gaps on the charts could provoke some short-term dips.




The weekly chart put in another lower high and lower low, but is this a topping formation or just another bull flag?




The DWCPF (S-Fund) made a 52-week new high on Friday but also created a new small open gap. It's in the middle of its rising trading channel and like the S&P, could try to test the top of the channel again. That open gap may be telling us that the bottom of the gap will likely be revisited at some point as well, probably this week since they like to get filled quickly.




The weekly chart chart of the S-fund shows that it is still well off the high made in first half of 2015 so while the small caps have been performing well recently, they are still lagging the big cap indices overall. Will they play catch up, or is this a negative divergence for the market as a whole?




The Transports are also well off their all-time highs from late 2014 but the shorter-term chart formations show improvement. There are a couple of inverted head and shoulders pattern here that we have been talking about, which are bullish formations, but in the very short-term Friday's action may have created a negative reversal bar. Most of them gave us at least a short term dip (red) while a few (blue) did not.




The EFA (I-fund) made a new yearly high on Friday but like the small caps and Transports, it's well below the 2014 - 2015 double top all-time highs. So more bullish formations (inverted H&S) within larger charts like the weekly DWCPF chart above, that show the longer-term charts still have some work to do to challenge the all-time highs.




The price of oil rebounded strongly on Friday after a terrible week for the commodity. However it ran right into the 200-day EMA and an old resistance line, and that's how it starts the new week, although the oil futures on Monday popped higher again above that resistance, and that's not shown here.




The AGG (Bonds / F-fund) did not get the reaction from the jobs report as I thought it might so the sideways action continued. Perhaps the more savvy bond traders are somewhat skeptical of the jobs report and are waiting to see what the Fed actually does before making their move.




Our annual NFL "Survival Pool" is starting next weekend. It's free and very easy to play. If you're interested in participating, check out this forum post for more information.
(Last Man Standing Football Pool 2016)


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

Tom Crowley


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