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TSP Talk: Choppy day as sellers slow, but buyers remain shy

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A couple of bounce attempts failed yesterday, but so did the bears as we finally saw a little green in some of the indices. Obviously stocks won't go down every day even in the worst of bear markets, but the question we all have is, what kind of bounce will we see once we get a taste of a low? 2 - 3 day bounces often fail in bear markets but there is also the possibility for a tremendous move higher, even if it only last a few days. You just have to go back to the Covid Crash chart to see some 1000-point rallies that were scattered in that year's bearish chart.

Daily TSP Funds Return
Bonds were up as yields slipped lower. Gold, silver, oil and bitcoin were down.

All eyes will turn today to the CPI, Consumer Price Index, Report which will be a key factor in the market's action today. The estimates are looking for a gain of 0.2% but more importantly investors are looking to see if there is any sign of a peak after last month's 8.5% year over year increase. Anything above that and it could be trouble. A 7 handle or below could ignite some buying.

This report could trigger a big move and whether stocks move up or down, I think the market is in need of some kind of a high volume washout low and a reversal. If you recall I noted on the S&P chart in the May 3rd commentary how light the volume was on the May 2nd reversal day, making me skeptical about it being a meaningful low. What we want to see is a spike in volume. The high volume on March 18th in this chart was a result of the quadruple witching options / futures expiration day, and not about a reversal, but the others were pretty good indicators.

When we start to look at some of the losses and how poorly part of the market has performed, I am drawn to this chart of the percentage of stocks on the Nasdaq that are trading above their 200 day EMAs. After Monday it was down to just 11.3%. This is getting quite extreme reaching levels seen only 7 or 8 times over the last 20 years, and it's a sign that the selling may be getting exhausted. There's no bell that rings when this bottoms so it could go lower, but it is probably in the neighborhood.

I'm going to leave the information about the TSP coming changes below, but let me say something about how I think this shutdown could play out, and maybe it's not as bad as it sounds. It would be nice if the TSP would give more details about what will happen.

They are saying, "All transactions temporarily unavailable May 26 to the first week of June."

It looks like, best case scenario, that it could be 3 or even just 2 days, but it's still vague.

There's May 26 and 27, which is a Thursday / Friday, so we know they will be shutdown then. The following Monday is a holiday so it's closed anyway. Then Tuesday is the 31st.

So, they are saying "first week of June", but does that mean June 1 or is May 31st part of the first week of June? Or could they mean mean June 1 thru June 7? I wish we knew.

The TSP is making big changes over the next few weeks and there will be a significant shutdown in the second half of May that will impact transactions, including our IFTs at some point. You can read more here: TSP is shutting down some transaction as early as May 16th until the first week in June.


Key transition dates

Expected transition dates May 16 to the first week of June

All transactions temporarily unavailable May 26 to the first week of June

Full access and transactions restored First week of June

Contributions and payments will continue during the transition period, your TSP savings will remain invested in the TSP funds you’ve chosen.

Payroll contributions and loan payments will continue.

Installment payments scheduled to be paid May 24 – May 31 will be disbursed early on May 23.

More info

The S&P 500 (C-fund) chart was posted up top so here's the DWCPF (S-fund) chart: It's not looking very good although it did erase nearly all of an earlier 2.2% morning loss yesterday - possibly suggesting a reversal, although we've seen a few of these reversals fail recently.

The EFA (I-fund) closed off its highs, off its low, and failed to fill Monday's open gap after coming back up to hit the March low again, which acted as resistance. Even if we get a bounce here there is resistance near 68 and that resistance is falling in the form of a descending trading channel. It will probably take a big data point or news event to hurdle that resistance.

BND (bonds / F-fund) was up for a second straight day as it tries to make some progress to move out of its long term downtrend.

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

Tom Crowley

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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)

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DWCPF (S Fund) (delayed)

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EFA (I Fund) (delayed)

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BND (F Fund) (delayed)

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Yahoo Finance Realtime TSP Fund Tracking Index Quotes