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TSP Talk: A positive, but mixed start to May

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Stocks were mixed, but mostly higher on Monday, the first trading day in May. The Dow gained 238-points, but we did see some weakness in the Nasdaq and the small caps. The I-fund got a boost from a negative reversal in the dollar yesterday - after Friday's big rally that triggered a big sell off in the I-fund. Bonds were slightly positive after giving away bigger early gains.

Daily TSP Funds Return


Internally the numbers were good, particularly on the NYSE, and even the losses in the Nasdaq didn't show up too much in the breadth ratios as more issues were up than down, and the share volume was fairly even.




The yield on the 10-year Treasury Note fell again so the growing economy theory hasn't shown up here for the last month, although there are other factors at work here.



The dollar flipped back to the downside with a 0.43% loss after that odd rally on Friday. The falling dollar helped many assets get back some of Friday's losses, and once again we're seeing skyrocketing commodity prices - particularly copper and lumber, and lumber has started to move past the parabolic stage at this point.

The price of lumber has basically tripled since BEFORE the COVID crash in the stock market. It had fallen to 275 after the COVID crash and it closed yesterday at 1419, so that's a gain of more than 500% in about 13 months. No inflation here, right?




And do you remember what oil was doing a year ago? It fell to about $7 a barrel with some futures contacts going negative for a small time. Yesterday it closed at 64.50. That's actually not very high using the average price over the last 15 years, but going from $7 to $64 in a year is quite a move.




The good thing about inflation is that the prices of things you own are going up. The bad thing is, everything that you need to buy, whether a one time purchase or everyday items, is going up as well. If salaries or retirement payments aren't keeping up and / or your interest bearing accounts are still paying close to 0%, you could be in trouble.

One interesting note is that the price of gold is about where it was a year ago. Gold is typically used as a hedge against inflation, and so far it hasn't really acted as if inflation is a problem. Perhaps investors are looking toward bitcoin or other crypto-currencies as an alternative? If you follow it, you may have seen that Bitcoin has doubled, and Ethereum has quadrupled just since January 1.




The S&P 500 (C-fund) was up but it gave back a lot of the earlier morning gains. It remains near the top of the red rising trading channel with the bears so far unable to put any pressure on at all, and that goes all the way back to the end of March. We are seeing some negatives in the indicators, as you can see the PMO momentum indicator has rolled over below its moving average yesterday. There is a set up for the bears to make a move if they want to try, but they've been hibernating for a while now.




The DWCPF (S-fund) also gave up an early gain to close slightly lower yesterday. So far it looks like a double top pullback and the test of whether it is going to be something more negative than that may come if it pulls back to test the bottom of the blue rising trading channel. A failure there would be a negative tell, although the 50-day EMA is just under that so it may get two chances to prove itself. So far it's just a double top dip.




The EFA (I-fund) popped back higher after Friday's sell off. Most of the action has had a lot to do with the dollar, which was up big on Friday, and own on Monday, so the I-fund continues to fade the action in the dollar.




The VIX was down on the positive day for the S&P 500, but it remains firmly inside the 16 - 20 range. On a closing basis it has remained between 17 and 19 since April 19.




BND (F-fund) rallied early as yields came down, but things flipped around and it closed closer to the lows of the day, and back below the 50-day EMA after a failed break above it earlier. That negative reversal day "should" produce some negative action in bonds today, but the support remains close at hand.




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

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.


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S&P500 (C Fund) (delayed)

(Stockcharts.com Real-time)
DWCPF (S Fund) (delayed)

(Stockcharts.com Real-time)
EFA (I Fund) (delayed)

(Stockcharts.com Real-time)
BND (F Fund) (delayed)

(Stockcharts.com Real-time)

Yahoo Finance Realtime TSP Fund Tracking Index Quotes