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TSP Talk: A bounce on Friday, plus TSP is shutting down soon

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We had a rare sighting of a bull in this bear market on Friday. It is remains bull hunting season so we could see them go into hiding again unless the bears need to take a break to gather more ammunition and supplies for the next next attempt to catch a horned wall hanger. OK, I'm not a hunter so the terminology may not be correct, but you get the point. After Friday's big rally, the bulls may have some fun for a couple of days, but the bears may be back for another go round at pushing the indices lower. We saw gains of 1% plus (Dow), 2% plus (C & I funds), 3% plus (Nasdaq), and 4% (S-fund). Bonds were down, oil and bitcoin were up big, and the metals were mixed.

Daily TSP Funds Return
We saw one of these rallies fail earlier in May, and there was a one day wonder toward the end of April, but if we go back to March we saw a similar rally hold on for two weeks. I doubt that the bear market is over, but the question is what kind of a relief rally will we see?

Friday's rally did change a recent trend of really bad Fridays for stocks. The arrows below represent Fridays over the last couple of months (Thursday in the case of the Good Friday holiday week) and we have to go back to April 1st to see the last positive Friday, and that one wasn't very big. March was a different story as stocks were in the midst of that two week rally. And before that it was more red Fridays. So perhaps this past Friday is indicating at least a short term trend change for stocks.

Over the last week we saw a couple of days where the declining share volume was more than 90 - 95% of the total trading volume on the NYSE, indicating perhaps some selling exhaustion. On Friday that flip flopped as we saw 91% up volume on the NYSE, and 88% on the Nasdaq. If you can string a couple of those together within a week you could have something. It can indicate a market low, but it's too early to get that optimistic so at this point I would say a couple of those may set up a meaningful bear market rally, rather than just another 2-3 day wonder.

The stock market was moving higher on Friday while bond yields were up again. At this point it would seem like we would need to see bond yields ease off their highs before we get a sustainable rally in stocks as something would need to change. There is some resistance in the current area for the yield on the 10-year T-Note, but it is just a week off its recent highs. The bond market has already priced in the Fed's plan to aggressively raise rates this year, so a dip in yields could ease investors minds for a little while, even though the hikes are necessary to contain inflation.

Higher interest rates is not the only thing the market is concerned with right now. The price of oil is on the move again, and perhaps that is not the worst sign the market could have since it could be an indication of higher demand, which means the economy is doing OK, but we are also hearing the Biden administration is "canceling three oil and gas lease sales scheduled in the Gulf of Mexico and off the coast of Alaska, removing millions of acres from possible drilling as U.S. gas prices reach record highs." (Source: So this move in oil could be either a demand issue or a supply issue... or both.

And of course the price of gasoline seems to move faster than the price of oil when they are going up and it is hitting the March highs right now while the price of oil is still about 16% below its 2022 high.

There's so many possibility out there with indicators and sentiment at extremes and stocks due for some relief, but rising rates, inflation, the war, and supply chain issues persist. The market is going to do what it does and usually in a way that will confuse the most people that it can. The question now is whether the rally needs to be sold quickly, or if it can sustain like the one in March where there were plenty of gains to be had for those willing to take the risk.


Update: It is official that we will be able to make transactions (IFTs) in our accounts until noon ET on May 26 through the "first week in June." There were some concerns that it may have started on May 16, but it is indeed 5/26.


The S&P 500 (C-fund) finally got a bounce after Thursday's spinning top / reversal formation. That's the good news. The bad news is the chart is still in an awful downtrend with plenty of overhead resistance. Even if we see another move higher into the 4100 - 4150 area, which would be a significant gain, it doesn't yet tell us if it can get back above that resistance to eventual retest those overhead moving averages like we saw in February and march during those relief rallies.

The weekly chart shows a positive reversal pattern, but you can see several positive reversal candlesticks on this chart and not all of them led to a bullish outcome. The 200-week average and the pre-Covid peak are below and potential downside targets, and they are still a long way down.

The DWCPF (S-fund) is testing the lower end of its bearish trading channel which has been intact since last fall. A move back to the top of the channel would be a very meaningful gain but there is a lot of resistance along the way to that potential upside target, including the 50-day EMA (purple.)

The EFA (I-fund) is in a similar situation where it has been due for some relief, but along the way down it built some tough resistance.

BND (bonds / F-fund) broke its 4-day winning streak and remains in the red trading channel where it has spent much of its time this year.

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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