TSP Talk Blog

The carnage continued on Monday as the fear frenzy has escalated to a new level. Stocks are being beaten down, and after another press conference on COVID-19 late yesterday before the closing bell, we saw a move lower into the close to see the Dow lose another record 2997-points. Little was spared although bonds rallied back strongly from last week's beating.

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I thought we were seeing some capitulation at the open yesterday with the futures pinned into "limit down" all night. But after a mild attempt at a rally - and by mild it was actually a dramatic 5% move off the morning lows, stocks closed back at the lows of the day setting new records along the way.

[Deleted: Sorry folks. I got a little political and went on a rant, so I'm deleting this info since this isn't the place. You didn't miss anything. Now let's see if the rest makes sense without it. ..]

I'm looking at this from an investor's point of view without emotions and without regard to personal health situations. Obviously anyone impacted by the virus has my sympathy and prayers, and I hope we can all get past this without seeing the damage that some are suggesting we may see.

The reason I bore you with my thoughts is that, along with 0% interest rates, very easy money available to borrow, multi year low gas prices coming, potential tax cuts, and many other incentives being created for business and individuals, either the world is coming to an end, or the economy is going to explode to the upside when this blows over.

Although there is one interesting development on the S&P 500 chart, I'm not sure charts and indicators are going to do much good at this point with emotions so high. People are either in stocks or out, and if you had any desire to sell, you probably did so already. If you had any desire to buy, you probably did that already too. So it may be a bunch of traders and trading programs going at it now, with a few straggler bulls capitulating.

I wanted to mentioned again, something I don't normally talk about in the public commentary. Two of our three premium services, RevShark and Intrepid Timer, have done an outstanding job managing this decline. Their patience has been amazing. The TSP Talk Plus service, which I run, expected a decline, but the system jumped back into stocks way too early after the first wave of selling, not thinking the market would go straight down, so I've have paid the price. We got our strongest buy signal that we ever had since the system was developed in 2005 on Friday, and that was followed by the best point gain ever on Friday, then the worst point decline in stocks ever, so what can you say? I'm beating the major indices by quite a bit, but with the losses they've taken during this decline, that's not saying much. Thanks to all of our subscribers for sticking with us during these crazy times.

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The S&P 500 (C-fund) fell through the prior lows again and the steep decline continued.




The longer term chart shows that the S&P 500 is getting very close to testing the 2019 - perhaps the target? If not, a break below may be what is needed for that capitulation ("I give up" mentality) I've been looking for.




The price of oil rolled back over but is it trying to make a double bottom? At 28 and change, how low can it go, and what will gas prices look like in a couple of weeks? We might get back to 1980's like prices.




The AGG (bonds / F-fund) snapped back so the bond market has gotten their capitulation and rebound. I'm a little jealous. But how much more can it go up if this is one of those dead-cat bounces?




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

Tom Crowley


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