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TSP Talk Market Commentary 5/22/2020

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Stocks opened slightly lower on Thursday and the bears were able to keep modest pressure on for most of the day, although the S&P was able to hold above its 200-day EMA yet again. The Dow lost 102-points while percentage-wise the broader indices lost about twice that. Small caps hung in there and actually posted a slight gain, while the F-fund is flirting with its all-time highs from March.

Daily TSP Funds Return
We saw another 2.4 million new people file for unemployment last week bringing the total to 38 million since the economic shutdown. But don't worry, the Fed and the government are going to pay for everything. I suppose that is what they are there for. As the House of Representatives looks to add another $3 trillion into the $6 trillion already spent - money that comes from tax payers and thin air according to Fed Chairman Powell - the stock market has been making a beeline toward the old highs for the last two months, and that' a little confusing if you ask me. Momentum and FOMO appear the be the culprits.

I won't dwell on it since I have talked about it enough, but the indices are in an area where bear market rallies tend to lose steam. The question is whether the bear market is going to remain with us or if stocks will continue higher and send the bear market packing for good.

It's a holiday weekend coming up and trading volume may get thin over the next few trading days, and you can't always trust the short term action as being where the market really wants to go this close to a 3-day weekend. Often the post-holiday action reverses the pre-holiday move, but despite recently making a new monthly high, the S&P has been chopping in the 2800 -2950 area for the last several weeks, with no real direction,

Right now it is at the top of that range, and as tensions between the U.S. and China escalate and make headlines, it could give investors reason to do some profit taking.

From HOLIDAY CLOSING. Some financial markets will be closed on Monday, May 25 in observance of the Memorial Day holiday. The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (May 25) will be processed Tuesday night (May 26), at Tuesday's closing share prices.

The S&P 500 (C-fund) lost ground on Thursday, but it did manage to close above the 200-day EMA for a second straight day on Thursday. It is in the middle of that rising trading channel, but also it's at the top of a horizontal range that has held for months, and also goes back a couple of years with a core range of 2600 to the 2950 area.

The DWCPF (S-fund) has been outperforming in recent days and doing a nice job of staying in that rising trading channel after a brief breakdown last week. It is coming up against its 200-day EMA, which could prove to be resistance.

The High Yield Corporate Bond Fund has been holding up well and consolidating nicely since the big Fed triggered rally in April when they said they will be purchasing corporate debt, which is basically illegal as we've mentioned before, but no one seems to care. It's above the 50-day EMA and about to retest that overhead 200-day EMA.

The EFA (I-fund) was down sharply on the day, thanks to a rally in the dollar, but even with the loss it has now closed above the 50-day EMA for a 4th straight day, which is getting serious. The 200-day EMA is still too far overhead to worry about.

The VIX continues to hang right on top of that key 200-day EMA. It looks ready to spring up, but so far the trend of lower highs hasn't been broken.

The BND / F-fund touched the April highs and the F-fund made its 3rd highest close ever yesterday. It could be a double top, or we could be in for a breakout. The sideways consolidation in BND has gone on since mid-April and also going back to early March when it last closed in this area. 87.62 is a new closing high for this ETF.

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Thanks for reading. Have a great holiday weekend! Let's take some time this weekend to remember those who made the ultimate sacrifice for our country.

Tom Crowley

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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.

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SPY (C Fund) (delayed)

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DWCPF (S Fund) (delayed)

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EFA (I Fund) (delayed)

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BND (F Fund) (delayed)

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