TSP Talk Blog

The bears were running out of steam after Wednesday's nasty sell off, but the bulls still couldn't put together a rally in the three major indices. They did try as we saw the indices chop above and below the flat line all day on Thursday, but by the close the buying dried up. Internally there was some strength brewing as the small caps put together a relief rally, as did the I-fund with the dollar tumbling. Bonds were up as yields slipped.

Daily TSP Funds Return More returns

You can see the advancers handily beating the decliners despite the losses in the Dow, S&P, and Nasdaq. For a long time those three indices were disguising the weakness that we saw internally. Is something changing?




Smalls caps (Russell 2000) peaked in early November while the Dow and S&P 500 peaked two months later at the start of this year. It's too early to say maybe small caps will start to outperform the main indices for a while? The glass half empty take is it could also suggest that the Dow (and S&P) are where the small caps were in January.




The yield on the 10-year was down but closed well off its lows after a breakdown below that small bear flag. It also closed below its 20-day average. I didn't mark them but there are several open gaps between the current level and those March lows. If this does start any kind of meaningful pullback off the highs, we could actually see a long overdue rally in the F-fund.




The dollar was down sharply also falling below support but still above its 50-day EMA which has been holding for months. This strength has put pricing pressure on commodities and stocks all year, so a pullback may be welcomed by investors.

As you'll see in the S&P 500 charts down below, there is a case for being close to a short-term low, but this is a bear market and the trend remains down and it is still very risky out there. While in a bear market we should probably lean toward expecting a more bearish outcome, but we also know how explosive bear market rallies can be so, stay nimble - or look away.

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Note: The TSP will stop processing IFTs after noon ET on May 26 through the "first week in June." What exact day the first week of June is, I don't know yet.

More: https://www.tsp.gov/new-tsp-features/key-transition-dates

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The S&P 500 (C-fund) was down moderately yesterday after being down sharply at times yesterday, and up quite a bit as well, but settled down about 0.6%. There is somewhat of a pattern forming that may be worth keeping an eye on. If it repeats what we saw earlier in the year we could be carving out a short term low in this area. It it falls below point 3, all bets are off. But even if we do get a rally off of these levels, the bear market will still be intact as there is a lot of technical damage that needs to be repaired.




The DWCPF (S-fund) had a good day as we said small caps performed very well compared to the large caps. But the chart is in a bear flag and remains in a descending trading channel. It's tough to get too optimistic here.




The EFA (I-fund) was up big thanks to that 1% decline in the dollar yesterday, but this chart has been littered with bear flags which have all broken down.




BND (bonds / F-fund) was up sharply early but faded to close near its lows, and still gained 0.2% on the day. The top of the long trading channel swatted it right back down so nothing has changed yet here... yet.

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Thanks for reading. Have a great weekend!

Tom Crowley

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