TSP Talk Blog

Stocks tumbled early on Tuesday after SNAP's earnings warning the nigh before. We did see an afternoon rally that pushed the Dow into positive territory by the close, after being down 515-points at the lows of the day. The S&P 500 closed 66 -points above its low, so after giving up all of Monday's gains and then some, it bounced back enough to hold onto a gain for the week. Small caps and the Nasdaq didn't hold up quite as well with both taking good sized losses, but they did see some late buying to take them off their lows in the afternoon as well. Bonds rallied as we saw a flight to safety, and the dollar was down again.

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It was almost as if the market went into panic mode as SNAP gave dire guidance for future earnings because of the economy. We all know there will be issues while the Fed is fighting inflation and raising interest rates, but we're now seeing some signs of rising rates and prices negatively impacting the economy. My question is why did Snap, of all companies, trigger so much fear? Is social media / digital advertising the barometer for our economy? I think it may have been overdone and just the nature of bear market activity but it also may have reminded investors that a stock that was already down sharply this year, can drop another 43% on top of that, so low prices can get lower.

Nordstrom was up big after hours on a stronger than expected earnings report, so after Wal-Mart and Target got crushed last week, we finally see something positive from the retail sector. This is helping push the overnight index futures higher, but it's a long way until Wednesday's opening bell.

The action was ugly, but the late buying is trying to tell us that there is some support near last week's low. Not that the lows of the bear market are in, but in the short term things had gotten quite oversold, and investor sentiment is about as negative as it has been since Covid. Just as stocks seemed invincible in the second half of 2020 and 2021, we are now seeing the algorithm trading pushing things lower than we might expect. We may just have to get used to that, and it's nothing new to see things move in one direction longer than seems reasonable.

Yesterday we saw commodities up with gold, silver, bitcoin rallying, while oil was basically flat on the day despite the sell off in stocks, and that had a lot to do with the continued pullback in the dollar. We're seeing some technical damage being done to the chart and it looks like a test of the bottom of the rising trading channel could be in play in the short term.




The Yield on the 10-Year Treasury was down sharply and some weakening economic numbers is part of it, but the selling in stocks yesterday may have triggered a flight to safety as yields move up and investors can lock in the higher 2022 rates rather than deal with the volatility of the stock market.




"They" are raising fear levels so it is my opinion that the big money is getting ready to do some buying. Like everyone else, they'd rather buy at lower prices and prices are getting low. As we saw with SNAP however, low can get lower, but stocks don't usually go straight down or straight up and there are short term opportunities given to us several times during the year. That doesn't mean I am going to buy and check back in after the summer. I watch closely because just as fast a bear market rallies go up, they can give back, and we've seen that a few times already this year.


Reminder: The TSP will stop processing IFTs after noon ET on May 26 through the "first week in June." What day exactly is the first week of June is, I don't know yet. More: https://www.tsp.gov/new-tsp-features/key-transition-dates

I will shut down the AutoTracker for IFT entries after noon on Thursday the 26th, just as the TSP is going to. I don't know when the TSP is coming back online so I don't know how long I will restrict IFTs, but I will keep an eye out for information. If you hear anything, please let me know. Tom @ ... etc. Thanks!

Also, I may take a day or two off from the daily commentary with a couple of brief write ups while the TSP is down. My Plus ETF System will continue to trade so there could be text alerts sent for those, but it has been a long, long... long time since I have had a real vacation where I did not have to work at all during the week (2003, I believe) and so I may take some advantage of this shutdown by cutting down on the commentaries.

RevShark is a pro trader and he's not taking time off so we will likely post his daily morning commentary for his subscribers, and the Intrepid Timer service also has ETF trades so I assume he will keep subscribers up to date although the daily write ups may be limited during the TSP shutdown.

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The S&P 500 (C-fund) gave us a mixed picture yesterday with sharp losses but a positive reversal after the late rally on Tuesday. However we can see that the recent up and down swings are all within that large descending trading channel and if the bulls are going to make a move, they will have to break through the top of that channel soon. I like to see that Thursday lows held so it looks like it is trying to carve out a short term bottom as we saw three days in a row where the S&P closed off the lows and near the highs of the day, but yesterday's action reminded us how quickly good set ups can turn sour.




The DWCPF (S-fund) took another beating as it seems to be the dog that gets kicked when there is bearish news. It is volatile like the Nasdaq and the news hasn't been good there, so that news gets absorbed by the small caps index. This one also needs help getting above the top of its channel quickly or the bears will have a lot of room to push it even lower if that resistance holds.



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The EFA (I-fund) was down but now out after another decline in the dollar. It looks like it wants to test the 50-day EMA but there are also some small open gaps below that could hold it back. Look how much influence the dollar has on this fund.




BND (bonds / F-fund) continues to show some improvement and yesterday it closed at a 4 week high.






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

Tom Crowley


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