View RSS Feed

TSP Talk Blog

TSP Talk: No relief for the bulls yet. Sentiment extremely bearish

Rate this Entry
Another down day for the stock market on Thursday as the downside momentum is gaining steam. The Dow lost "just" 107-points but higher yields in bonds and rising interest rates are starting to put some heavy pressure on the broader market, particularly small companies that depend on credit, and those indices suffered larger losses. The dollar was up, and bonds tanked as yields pushed higher again.

Daily TSP Funds Return
The Fed's rapid interest rate increases is continuing to wreak havoc on US stocks, and central banks around the world are following so global stocks markets are falling as well. Yields spiked again yesterday and I heard someone trying to explain what happened, which had to do with the Japanese currency, but bottom line, the Fed is now selling US bonds (quantitative tightening), the Japanese are selling US bonds, and they mentioned China, but I wasn't sure if they were selling as well. Anyway, I would have expected yields to start to move lower as the economy heads toward a very possible recession in the US, so perhaps that explains why it isn't happening yet?

We did see a yield curve inversion on a closing basis between the 10 and 30 year bonds, as the 10-year now pays more than the 30-year, and look at the moves in those yields yesterday after both sold off following the Fed decision on Wednesday. This is troubling stuff, so if you wonder why stocks haven't bounced yet...

Let's say the Fed decides that they've gone too far with yields after killing the economy and the stock market to curb inflation, so they start to cut rates. Would stocks just take off from that point? Maybe not, or probably not. Take a look...

This lower chart shows the Fed Funds Interest Rate going back to 1999. You can see that they were raising rates in 1999 and into 2000 before they put on the breaks and started cutting. What did the stock market do? It tanked for another year or more. Same thing before the financial crisis. They were raising rates from 2004 until 2007 when they finally started cutting. That was BEFORE the financial crisis bear market of 2008.

Finally, they were raising rates in 2017 to 2019 and then they started to cut in late 2019, and of course we got the covid crash in early 2020. Now the rate is near 3% and still rising, so we may be early in this bear market process. I hope I'm wrong, but it doesn't look good.

As for the market, we still have not seen any signs of capitulation, especially from us retail investors. They have been net buyers this year so they have not shown much fear, despite some surveys that tell us they are bearish, but they may not be selling yet.

As I have shown before, we did see a couple of big spikes in trading volume during the last two quadruple witching expiration days, but other than that, there is no sign of investors giving up or panic selling yet.

We should certainly see some oversold bounces, and the indicators suggest that could come soon, but I don't see anything that suggests a bottom is coming any time soon.

Admin note: I will be on vacation next week, heading to the east coast where I grew up, for the first time in 10 years to visit some family that I haven't seen in a long time. I will check in every day but the commentaries may be brief, unless something major happens. My schedule will also be completely off being in a different time zone and working around some personal plans, so I'll apologize in advance, and appreciate your patience if I post reports or update the AutoTracker later than usual - including later today. Premium alerts will go out as needed.

The S&P 500 (C-fund) slid below that recently filled open gap near 3800. There's more support, or should I say potential support, near 3720, but everyone has been wanting to know if we would test the June lows, and I doubt it would come down this far without doing so. That doesn't mean it can't bounce for a few days first, but it sure looks like 3650 is in the cards at some point soon.

The DWCPF (S-fund / small caps) was clobbered yesterday and it seemed like a delayed reaction to the Fed's hawkish outlook on interest rates, but the rise in yields yesterday did not help. Small caps depend more on credit than large caps so that's why they tend to lag in this type of environment.

The EFA (I-fund) has closed below the July low for a second straight day. No double bottom bounce yet. The strength in the dollar is the main reason why this chart looks worse then the S&P 500.

The BND (bonds / F-fund) gapped lower, broke below the prior lows, and is now without much support and in need of help. I mentioned above why yields may be moving higher and I wonder if bonds can stabilize if the Fed, Japan, and even China, are selling US bonds? This is a new development for me. I thought for sure bonds would be getting ready to rally as investors start panicking over the stocks market losses.

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 so much for reading. Have a great weekend!

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:  No relief for the bulls yet. Sentiment extremely bearish" to Digg Submit "TSP Talk:  No relief for the bulls yet. Sentiment extremely bearish" to Submit "TSP Talk:  No relief for the bulls yet. Sentiment extremely bearish" to StumbleUpon Submit "TSP Talk:  No relief for the bulls yet. Sentiment extremely bearish" 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