TSP Talk Blog

Typical bear market action once again as every time you think the market is ready to bounce, it rolls back over and keeps the downside pressure on. The indices tested the June lows again and now, heading into a potential Turnaround Tuesday, it's becoming make or break time. Not that stocks are going to bottom here, although anything is possible, but there are psychological reasons why double bottom bounces occur. The Dow lost 330-points.

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Rising yields and the strength of the dollar are keeping the pressure on the stock market and that is the bottom line right now.



The falling price of oil doesn't seem to be a big part of the equation anymore as it fell below 77.00 yesterday and is nearing its lowest level of the year. Unfortunately the stock market brushed that aside because it is a product of lower demand and a weakening of the economy, and the combination of that and the inflationary pressure is not what investors want to see.


The S&P 500 (C-fund) remained down near the June lows, and other than the limited possibility of some sideways action, we have two more probable outcomes coming our way -- A break down below the June lows, or a relief rally bouncing off those prior lows. I mentioned Turnaround Tuesday but that sounds a lot better in a bull market, and and clearly this is no bull market. We could see some stops getting run below the June lows and that could trigger a higher volume capitulation-like reversal - even if temporary. We'll see.




Bonds were down as yields continue to rally, as I mentioned.

Between the market leading Dow Transportation Index and the High Yield Corporate Bonds making new lows yesterday, it might be tough to see the S&P 500 bounce here, but things are very oversold and sentiment is extremely negative, and that's what the bulls are trying to hang their hats on for a reason for a rally - and I will keep saying - even if temporary.


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

Tom Crowley



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