TSP Talk Blog

It was another quiet low volume trading day and we saw modest gains across the board yesterday with a little help from the Fed. The Dow gained another 75-points as all of the indices are grinding higher. The S&P 500 actually made a new all-time closing high but some of the other indices continue to lag, and unfortunately its some of the market leaders.

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The Fed released their FOMC meeting minutes yesterday and that kicked the indies into another gear as small gains became more meaningful. Their outlook was a little confusing when they all but assured us of a rate hike in June, but also said they will be shrinking their balance sheet. The jobs market is hot but inflation is not. I guess some smart people understood this situation and used it as a reason buy yesterday afternoon, and push the S&P 500 to a new closing high.

Monday is Memorial Day so the markets will be closed. Seasonality toward the end of May has historically been a little better than the middle of the month, but it's not exactly the Christmas / New Years bullish bias. Today is the last negative average day of the month.


Chart provided courtesy of www.sentimentrader.com

From www.tsp.gov: "HOLIDAY CLOSING - Some financial markets will be closed on Monday, May 29th in observance of the Memorial Day holiday. The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (May 29th) will be processed Tuesday night (May 30th), at Tuesday's closing share prices."


The SPY (S&P 500 / C-fund) pushed to a new closing high on Thursday. That could get more folks who are sitting on the sidelines interested in jumping back in, but it has come a long way since last week's selloff and this angle of incline may not continue for too long, although it did in February. Whether that means a pullback or just sideways consolidation, I don't know, but it seems not giving stocks the benefit of the doubt this year has not been profitable.




The DWCPF (S-fund) moved above that key descending resistance line yesterday and that could potentially set the stage for a push toward recent highs for this lagging index. Like the S&P 500, it is above the 20 and 50-day EMA but during pullbacks it seems to be taking more of a beating so it's more risky at this point - unless investors choose the value over the new highs.




The Dow Transportation Index remains below the 50-day EMA and its descending trendline. It's in a tough spot right now and as we mentioned yesterday, the bulls will want to see 9100+ before they can trust this chart.




The EFA (EAFE Index / I-fund) was fairly flat again yesterday so I want to show you the chart of China's Shanghai Index instead. China is not in our I-fund but it can have a major influence on global markets when things go wrong. It got a nice bounce of its lows yesterday so that may be a double bottom. Otherwise, a breakdown may give investors a reason to take profits in the U.S. markets.



The AGG (Bonds / F-fund) was up yesterday keeping its bull flag intact, and leaving those two gaps open. Why bonds are still near recent highs remains the question. What are the bond traders worried about in the economy that they expect yields to move down further?




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

Tom Crowley


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