TSP Talk Blog

Stocks were wild, and mixed again on Monday. The Dow (-37-points) and the small caps were down, while the S&P 500 and Nasdaq were up. But that's just part of the story as the indices plunged in mid-morning trading, only to come roaring back into the close. The Dow was down 570-points at the lows yesterday. So much for opportunities to try to buy a dip because these moves are lasting minutes, not days or weeks, and if you saw the sell-off and tried to act before our IFT deadline, by the close your TSP account was buying near the all-time highs again because of that afternoon rebound.

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One interesting move yesterday came in the bond market where yields fell sharply (bond prices and the F-fund higher) and that is usually a result of some kind of a weak economic indication. It's just one day but it did turn the yield chart into a bit of a toppy looking pattern.




The wild stock market speculation in early 2021 continues and here's another one that everyone tried to jump on all at once. Gamestop came into 2021 trading just below $20 a share. Yesterday it hit a high of $160 before flipping back over and closing at 76.79. This type of action is reminiscent of the dot com bubble action.




We've seen several like this in recent months, and this kind of action could go on a while, but it is usually a sign that the market is in need of a refresh to remind folks that stocks don't only go up.

We have an FOMC meeting today and Wednesday, and big names earnings reports from Microsoft and American Express will be released today. Apple, Tesla, Facebook, and Boeing report tomorrow. Amazon and Google come out next week.

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The S&P 500 (C-fund) fell sharply early on Monday, filled that open gap near 3800, and bounced right back. It remains in the rising trading channel, and it is getting unusually extended for that type of pattern and I don't know how much longer that can last.




The DWCPF (small caps / S-fund) also rebounded nicely but it did close in the red, although not far off the all-time highs.




The EFA (I-fund) was also down slightly so this mini-breakdown below its trading channel continues.




The Dollar was up yesterday putting some of the pressure on stocks, and particularly the I-fund. The recent bounce off the lows now seems to be forming a bull flag, which would be bullish for the dollar, but perhaps not so bullish for stocks if it does breakout - at least in the short-term. As we talked about before, a crash in the dollar wouldn't be great for stocks either, so right now a little stabilization in the dollar may be the best bet for stocks.




The Volatility Index spiked over 26 and above the 200-day EMA during Monday little "flash crash" that lasted about an hour. By the close it was back down to 23, but still held above that rising support line.




BND (bonds / F-fund) rallied sharply with yields dropping and that caused a mini breakout of that blue pennant like formation. It stalled at the 50-day EMA. We still have the open gaps above and below the current level.




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

Tom Crowley


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