TSP Talk Blog

Stocks gave us a pretty lame bounce yesterday, compared to some of the previous snap-back rallies we've had, but it did come back from a 3% morning loss to close in positive territory. The prior one day rallies had been explosive, but were sold again the next day each time. At least it was different so perhaps the outcome on Friday will be different? The Dow ended the day with a gain of 188-points - a moral victory despite falling off its highs near the close, but also quite a bit off the morning lows.

Daily TSP Funds Return More returns

Unfortunately there was more selling after the bell on Thursday again so it seems the futures traders are the ones putting the pressure on with this suspicious activity. Some big players can push the index futures around pretty strongly, and that can set the tone for stocks at the open the following day.

The Initial jobless claims report rose dramatically, as was expected, but it was even higher than expected. On the bright side, stocks did not tank on that news. Well, it did initially, but bounced back fairy quickly.

There was a fade in the final 15 minutes of trading yesterday making it different than the prior explosive rally days, and that's interesting. The pattern of positive days seeing a spike up into the close, followed by a sharp sell-off in after hours trading made it understandable why some bulls may have wanted to sell near the close yesterday. But will the fade and quiet close yesterday change that pattern? The market could sure use a change.
Oil jumped 24%, the biggest one day gain ever, and that helped bolster small caps. That gain helped the indices stay positive, and those smaller oil related companies shined in that small cap Russell 2000 Index, as well as in our S-fund.




The market needs some good news for sure, but can the news get any worse? How much of the worst case scenario is already priced in? Has the market priced in millions of cases with 5 or 6 figure deaths, or is it still priced with the current case and death count? Does it think this 15 day shutdown will help, or is it expected more of the same afterward?

That's what's tough about this. Even if there was a magic wand that wiped this virus out, stocks would rally but what is the state of the market, the economy, and investors knowing these kind of things happen? Complacency was very high when the year started. Investors may be very reluctant to get to that state of mind again for a while.

So, I'm not super bullish and calling for a bottom, but if history is any indicator, we should see an eventual relief rally that lasts more than a day. We saw our share of those rallies during the 2008 bear market despite the trend being down.




Heading into the weekend makes it a bit uneasy as the news won't stop tallying up the coronavirus cases and the number of deaths for us. Stay safe out there.

---

The S&P 500 (C-fund) managed a small rally which felt meaningless but it was something different. The fact that it came back from a 3.3% loss in the morning to close positive, was meaningful, but the bears did put some pressure back on in the waning moments of trading. The downtrend remains intact and the bulls need to break that resistance before other buyers will come in.




The DWCPF (S-fund) had a big day gaining nearly 6%, but even that wasn't enough to grab back the giant losses from Wednesday. It's a start, but like the S&P 500, that resistance line needs to break to invite scared buyers back in.




The EFA (I-fund) was up and it is trying to stabilize holding above 46 for four straight days. But if they wait too long it will look more like a bear flag than a low of any kind.




The price of copper was really beaten down earlier this week but yesterday it saw a monster positive reversal day closing about 11% off the lows. That feels like a bottom there, but it's tough to trust the charts in this kind of environment.




The AGG (bonds / F-fund) bounced back from the dramatic sell-off in bonds on Wednesday. These went from overbought to oversold in a hurry. Everything the government is doing is an attempt to stimulate the economy, and that has pushed yields back up, and bond prices down. That makes it tough to figure out where this fundamentally wants to go. The Fed Funds' 0% interest rate may suggest yields may come back down, giving bond prices and the F-fund a boost, but like stocks, they are very volatile right now and hard to put a price on.




Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php

For more info our other premium services, please go here... www.tsptalk.com/premiums.html

Thanks for reading. Have a great weekend!

Tom Crowley


Posted daily at www.tsptalk.com/comments.php

The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.