View RSS Feed

TSP Talk Blog

TSP Talk: Internal damage and warning signs

Rate this Entry
No follow through to the pre-holiday positive reversal as Turnaround Tuesday turned into a Trouncing Tuesday for stocks. The Dow dropped 543-points on the day, and higher yields rising were the catalyst as the 10-year Treasury moved close to 1.9% yesterday. This recent push higher in yields isn't too much of a surprise to many people, but perhaps the speed of the move is. Some investors, who may be still heavily invested in growth stocks and not allocated for a high interest rate environment, may be scurrying for the exits. Bonds were down and the dollar rallied.

Daily TSP Funds Return
We've been watching some charts break down, and others on the brink looking for support, and yesterday's selling put some of those charts that were hanging on, into the break down category. The Nasdaq hit a 3-month low yesterday, and here's the Dow breaking below its recent rising trading channel.

The weakness ran deep as the internals were very negative all around, and the new lows are piling up again, creating more Titanic Syndrome warning signals.

This is starting to get very interesting. The S&P 500 is now 5% off it recent all-time high and here we see that we've had 34 separate Titanic Syndrome warning signals over the last 6-months, and this number was only surpassed during the build up to the dot com and financial crisis bear markets.

Chart provided courtesy of

This 10-year Treasury Yield closed at its highest level (1.87%) since before the Covid crash. Not that the high yield caused the Covid crash in early 2020, but the question is whether the current economy is strong enough to handle a yield moving up this quickly.

The dollar moved sharply higher and back into that descending channel after breaking down below it last week. This put pressure on the prices of many things, and that generally impacts the I-fund most of our TSP funds, although the I-fund did outperform.

Stocks peaked about two weeks ago - at least the S&P 500 has (it's been longer for the small caps) and we saw how strong relief rallies can be during the first week in January. I'm concerned that this market could go lower over the next several weeks, but I'd expect the occasional rebound that can be played to buy to try to peal off some return in a down market, and / or used to sell stocks at higher levels. It's been a couple of years since the S&P has had an official 10% correction and that wouldn't be a bad place to expect this market to go at a minimum.

The Covid crash was an anomaly as far as how quickly stocks went from highs to down over 30%. The 2007 - 2009 bear market was a grind down over years to that eventual bear market bottom in 2009, and there were many playable rallies during that time. I don't know for sure but I doubt that we will see anything to that extent, although I reserve the right to change my mind. But as long as it is not a crash and rebound like 2020, it should be easier to navigate than that devastating, but brief, Covid bear market.

The market is looking hard for a catalyst and earnings season is kicking and may provide that. On the other hand, rising wages and interest rates could give companies a reason to warn or guide lower for future quarters, so we may not get a cushion there.

The S&P 500 (C-fund) chart is deteriorating some here as it failed at the bottom of that blue trading channel, although it is right near that orange 100 day EMA, which has been holding, so we'll see if that can continue to hold today. There are three small open gaps below down to about 4375, and the 200-day EMA is near 4400, so those are all potential downside targets should this pullback continue. The lower low on the PMO indicator is not a good sign.

The DWCPF (small caps / S-fund) has been lagging for some time now, and yesterday was no exception as it closed at a 10-month low. It has broken several layers of support along the way. I don't see any reason to call a low on this one yet, and it is a prime candidate for a sell the rallies approach.

The EFA (I-fund) held up better than the U.S. stock funds yesterday but the 0.63% rally in the dollar did not help at all here. Its ascending channel is still intact keeping it the leader of the TSP funds for now.

BND (Bonds / F-fund) has gone from bad to worse as we saw another gap down after failing at the old support line last week. The gap is always a potential upside target but if it gets there I would seriously be considering selling it if I was in the F-fund, which I am not.

Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to:

For more info our other premium services, please go here...

To get weekly or daily notifications when we post new commentary, sign up HERE.

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

Tom Crowley

Posted daily at

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.

Submit "TSP Talk:  Internal damage and warning signs" to Digg Submit "TSP Talk:  Internal damage and warning signs" to Submit "TSP Talk:  Internal damage and warning signs" to StumbleUpon Submit "TSP Talk:  Internal damage and warning signs" to Google


S&P500 (C Fund) (delayed)

( Real-time)
DWCPF (S Fund) (delayed)

( Real-time)
EFA (I Fund) (delayed)

( Real-time)
BND (F Fund) (delayed)

( Real-time)

Yahoo Finance Realtime TSP Fund Tracking Index Quotes