TSP Talk Blog

Small to modest gains for most of the indices yesterday as the momentum feels like it is slowing, but the bears are really nowhere to be found yet. The Dow gained another 104-points, while small caps led again. Bond yields moved higher after Friday's sharp decline, and the dollar was down, also reversing Friday's move. Silver and gold have come back to life a bit, even with the dollar rallying, suggesting inflation may be pushing investors that way.

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It was kind of a slow day, the day before the key monthly inflation data reports CPI and PPI are released are released today and tomorrow respectively. The bulls made a move early, but the tape felt a little tired as the morning gains diminished as the day wore on. The bears are still not putting on any pressure, but the momentum has kept them at bay, and they may be ready to pounce once they smell weakness.

Comments from the Fed released yesterday suggested that the economic effects of the pandemic are waning, but stocks valuations / Price to Earnings ratios are on the upper end of historic norms, while bond yields are low compared to historical ranges. They also mentioned Chinese real Estate risks pose some risk to U.S. financial system.

Not much new in that statement, but when they say it out loud, maybe folks will hear it.

Internally the numbers were quite strong, especially on the Nasdaq where the approximately 8 to 3 ratio of up to down volume shows a big day, however the Nasdaq indices didn't look all that impressive.




The Nasdaq Composite was up just 0.07%, and the larger tech Nasdaq 100 Index was down on the day, so the strong internals told a different story than the Nasdaq indices themselves.



The yield on the 10-year bounced back up to about 1.5%, but as bear flags and head and shoulders go, there could be some pushback at those resistance areas near the arrows below. There is an open gap near 1.4%, and they tend to garner attention, but lower yields and interest rates aren't making a whole lot of sense to many of us lay-people right now.




The dollar fell and has come way down since that early reaction to Friday morning's jobs report. The bull flag breakout may have turned into a fake out as it closed below two layers of potential support.




There is a lot talk of people expecting a short term dip, but a climb into the end of the year, and as we talk about often, when everyone is on the same page, we don't usually see it play out that way. That was also my take so I may have to rethink what is happening, although I am positioned for some kind of pullback now.

Per tsp.gov: Holiday Closing: Some financial markets will be closed on Thursday, November 11 in observance of the Veterans Day holiday. The Thrift Savings Plan will also be closed. Transactions that would have been processed Thursday night (November 11) will be processed Friday night (November 12), at Friday's closing share prices.

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The S&P 500 (C-fund) was relatively flat on Monday but just staying slightly positive was a plus at this point as the rally gets long in the tooth. Today is Tuesday and a Turnaround Tuesday is written all over this chart, but again, if we all think that, it probably won't happen. The only thing bad to say about this chart is that it looks too good, and all good things must come to an end at some point.




The DWCPF (S-fund) didn't miss a beat gaining another 0.53% on the day as it rises up the top of the rising trading channel. At this point, even a dip to the bottom of the channel would be a 4% decline off yesterday's high. There is a lot of support near 2320, but the open gaps are well below that.




The EFA (I-fund) was flat and the decline in the dollar may have helped here. Friday's smaller than expected gain in the I-fund may mean the TSP will bolster Monday's price some to catch up. We'll see. The price hasn't been posted yet as I write this.




BND (Bonds / F-fund) was down sharply after the big bounce off the recent lows, and filling that open gap near 85.80. It's still above some key support and looks good, but as we've talked about, why yields would fall (which causes bonds to rise) in this growth environment is a conundrum.

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

Tom Crowley

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