TSP Talk Blog

The big three indices were all green yesterday, but there was a significant pullback from the intraday highs making for some unfavorable short-term formations on the daily charts. The Dow gained 16-points, and the S&P 500 closed higher for the 9th time in 10 days, but the 8-point gain was well off the 32 point gain it had in morning trading. Small caps were down on the day, and the I-fund had to battle another rally in the dollar. Bonds were up for a third straight day with yields slipping again.

Daily TSP Funds Return More returns

After the bell yesterday we got earnings out of a few possible market movers: Google did there normal trouncing of the estimates, but because of high expectations and a near 100% gain over the last year, the initial reaction was muted. Microsoft and Twitter's numbers were fine and both were flat in after hours trading, while Texas Instruments and Robinhood were trading sharply lower on earnings.

We'll see how investors and traders handle this today, since the recent rally higher in stocks has to be justified with something good, and so far the numbers are just OK, and we can see how much some of these companies have already gone up over the last year leading up to these earnings.





Despite the green indices, internally the numbers were mostly negative although early strength in big tech pushed the advancing volume well above declining on the Nasdaq. The weakness in small caps kept the NYSE breadth negative.




The Yield on the 10-year was down and the dollar was up.

The strength in the dollar didn't hurt the price of oil yesterday as it gained another 1% to close over $84. When this gets investors' attention, I don't know, but I'm sure you're all feeling some effects of the price more than doubling over the last year.

There was some news out of Washington after the bell yesterday where Democrats are proposing a 15% minimum corporate tax on large corporations, in lieu of a higher tax rate which had been getting some push back. There wasn't much of a reaction after hours, and that may have been because of how early it is in the process, even if it does eventually pass down the road in some form.

There is an FOMC meeting Tuesday and Wednesday of next week, and the tapering discussion could be a market mover, so investors could get tentative late this week and into next.

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The S&P 500 (C-fund) saw a modest gain yesterday, but it came off a much higher morning level to create a negative reversal candlestick. It's obviously come a long in a short amount of time as investors tried to race this back up to the rising channel it had been in before the GDP forecast started to fall from about 6.5% down to 0.5%, according to GDPNow back in September.



Not that the economy and stock prices are directly correlated, but why prices would go right back to where they were after this realization of the economic slowdown, I don't know, except that markets are not always rational, and there's no law that says they have to be. They can stay irrational for longer than anyone anticipates. Of course one thing that the bulls know is, if the economy is slowing, the Fed won't touch those 0% interest rates, and that may be the most important factor to the stock market.


The DWCPF (S-fund) seemed to be going up just about every day. We saw a similar negative reversal on Friday the 15th of this month, but the upside resumed the following trading day so negative reversals are no guarantee that losses are coming, but there should be some follow-through weakness here to start the day on Wednesday. Whether the dip buyers show up later in the day is the question.




The EFA (I-fund) shows a gain here but with the dollar up strongly, the TSP may be hesitant to give a gain (I'm still waiting on Tuesday's prices as I write this.) it blasted through some resistance during the morning trading but it backed off by the close to end the day back below resistance.




BND (Bonds / F-fund) rallied for a third straight day, and that was enough to push it through some initial resistance, but it remains below all of the key moving averages so the trouble may not be over yet. There was some solid support at last week's lows so we'll see how much it can build on that.




The Dow Transportation Index has been the leader this month, after lagging for months. It tested the prior highs and backed off along with the other indices, so there is a setup for a possible pullback. The action is good but we'll have to keep an eye on that open gap near 15,000 as a potential target for a pullback.

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

Tom Crowley



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