TSP Talk Blog

Wednesday was yet another day that started out on the positive side and ended in the red. The bulls made another attempt to buy weakness yesterday, but the bears were ready with another wave of selling into the close. The Dow was fairly flat but the broader indices were down more sharply despite yields pulling back for a change. The dollar was also down and that helped the I-fund lead the TSP funds yesterday.

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The Dow posted a gain on Tuesday but for the broader indices the losing streak continued. Despite the losses, the Volatility Index (VIX) was down yesterday as stocks traded in a rather tight range all day, and some modest afternoon gains were wiped out after interest rate comment's from the Fed. Yields and the dollar were up again, and that's keeping the pressure on as stocks try to price in this latest push higher in yields.

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Stocks gapped up on Monday morning, and in a volatile market, Monday gaps are very vulnerable, and that proved to be the case as the Dow, up 400-points at its high yesterday, traded in a 730 range and closed 650-points off those morning highs. Israel fending off Iran's attack eased weekend nerves helping the market rally early, and strong retail sales was a good sign for the economy, but it also pushed the dollar and yields up to new highs for the year.

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Whether it was a culmination of less favorable inflationary data, earnings and nervous guidance from JPMorgan Chase's Jamie Dimon, or just the dip buyers giving up for a day and allowing a pullback to ensue, stocks relented to the bears on Friday and we had the worse day for the S&P 500 since January. The losses were broad and sharp despite some relief in the bond yields.

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1The bull market is not going away easily, if at all, but the economic data and the Fed are continuously bombarding investors with new information that is whipsawing the indices. Most of the big losses from the reaction to Wednesday's hot CPI report, were erased after the dip buyers bought the cooler PPI data. The Dow was flat but the broader indices did quite well. Yields and the dollar were up again, but the dip buyers ignored it on Thursday.

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