TSP Talk Blog

The intraday charts look choppy but the trading has been slow and on lighter volume recently, and in the final hour of trading we've been seeing a push in the opposite direction of the earlier trends. On Monday we saw some late selling in a more positive day of trading, and yesterday we saw late buying after a mostly negative day. The Dow gave up 38-points but most of the indices were fairly flat by the close with tech stocks lagging some again. Bonds were down as yields continue to bounce off the recent lows.

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With the next FOMC meeting scheduled for early May, we have more than a month before we know the fate of the next decision on interest rates. The consensus is about 50/50 on whether they raise another 0.25% or remain where they are, so that's a pretty good difference and I can only imagine, given that difference, that the market hasn't priced in either -- or both? Meaning, we could have a big move coming once we know, but again, that's more than a month away.

The bond market is showing another push higher in yields recently after the sharp decline earlier this month. The 200-day EMA held again on the lower end and we have a second head and shoulders pattern, but like the failing flag formation I talked about yesterday, so far these typically bearish patterns have not led to any breakdowns.




Next week is the start of quarter #2 and since the market peak back in January of 2022, the start of a new quarter has often led to a major turn in stocks prices, with the last three being a positive turn. However, last April it was a negative turn, but stocks were rallying in of March in 2022.




Small caps have been hit hard this month and we can see that the end of the 4th quarter (EOQ) was weak in December of last year as well, but things flipped around dramatically at the start of the first quarter. So are we set up for another new quarter reversal, or will that bearish looking flag finally act like a bear flag and break down?




We get another estimate of the 4th quarter GDP on Thursday, and maybe the economic data highlight of the week will be the PCE Prices and the Personal Income reports which come out on Friday. The GDP is the key indication of economic growth. The PCE is one of the Fed favorites for determining the inflation levels.

Next week we get the March jobs report, and as I mentioned the next FOMC meeting isn't until May so, while it looks as if the market is coiling up for an imminent big move, we don't have a lot of catalysts on the calendar.

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The S&P 500 (C-fund) has been bumping against its descending overhead resistance line for a week now, but it refuses to stay down. The trend has been descending since it broke below the rising trading channel in the middle of February, and now, after about 6-weeks of trending lower, is it ready to head back up - based on the new quarter / new direction trend we've been seeing for the last year or so? We have seen trading volume dry up during this most recent rally, but the higher volume did come near the recent lows and reversal higher. It's tough to buy at resistance so I probably need to see a few closes above the channel and the moving averages before feeling more comfortable about a rally. Doing so beforehand seems like a gamble, but sometimes gamblers win.




The DWCPF (S-fund) put in that intriguing positive reversal last week and while that low could be tested like the reversal and re test in December, this does still look like a bear flag and it remains below the blue trading channel and the major moving averages, so it does not look like a good risk / reward play just yet.




The EFA (I-fund) also looks interesting as it holds up well, but remains in the descending channel with a couple of open gaps that need filled below.




BND (bonds / F-fund) has so much going on and maybe a coin flip would be a better approach at picking a direction. A head and shoulders pattern, a bull flag, open gaps, and another push below the 200-day EMA? Pass me that coin.




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

Tom Crowley




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