Well, that was something. We knew something could happen at any moment, and we've seen a few big rallies recently. It's just that the prior rallies failed before the close. This one stuck - at least for one close. That's what a short-squeeze looks like. We saw huge gains across the board with a 12% gain in the Nasdaq? I hear that was the second largest daily gain for that index. The TSP stock funds gained between 7% and 10%, which is unheard of, but that's what you get after huge losses and when investor sentiment is at extreme fear levels. But now the bond market is getting a little too volatile. That's a little worrisome.
One thing about big moves like this is that it can be as emotional for those in stocks as well as those out of stocks. And with our TSP, if you were out of stocks yesterday, you could do nothing. Even if you had an IFT left, the rally started after the IFT deadline so chasing when the rally started would put even another day behind.
Historically the largest daily gains almost always come after the largest losses and during bear markets. I believe I heard that yesterday's gains in the S&P was the best one day gain since October 2008, one of the worst months ever for stocks, and that bear market did not bottom until March of 2009.
As great as the day was, and it could have legs, there are obvious technical targets that could pose a problem.
The S&P 500 (C-fund) has a lot of resistance near 5520, 5550, and 5675. These are obstacles and yesterday's gains while promising, is no guarantee that the bear is done. The high volume is a very good indication that we have bottomed, but history suggests retests of the lows in the coming days or weeks are possible. So while I was looking for a snap back rally, now that yesterday's rally happened, I am very aware of the potential that we could fail at some of those resistance levels, and even give back some or all of those gains before this mess is over. Investors now have 90 days of wondering what happens next while waiting for the pause in tariffs to run out.
The bond market is acting funny to me. The 10-year Treasury Yield closed well off its highs but before it reversed lower, it blasted through the overhead resistance rather easily, closing right on some of that old resistance. And look at the move in the BND (F-fund) in the next chart...
It was up 0.23% on the day, which is a decent move for bonds, but that was after it fell through support on Tuesday, and was slammed early yesterday before the reversal pushed it back into positive territory. Now the 50-day EMA and that broken support line may try to act as resistance. Why it's behaving this way, I'm not sure. I even heard someone explain it and perhaps it had to do with inflation and China selling bonds, but they were talking in circles, like I often do.
That's all for today. I don't want to over analyze market action that is typical (we expected a rebound), but yet still unpredictable in the short-term.
By the way, the TSP Talk Plus ETF System is up over 40% since April 2nd. You may need some adult diapers if you want to trade leveraged ETFs when the VIX is over 30, but that was fun. Not typical, but fun.
DWCPF (S-fund) followed suit with the rest of the market and closed with a remarkable 10% gain. You can see all of the resistance it will have to deal at 2000, 2100 and then 2200. 2100 looks doable but it may not be a straight line there as we could see some profit taking after a day like Wednesday.
ACWX (I-fund) gained 7% and it moved inside that large open gap. There's resistance here as well, but the biggest problem for the I-fund may be the dollar, which is looking strong again and is at an important pivot point.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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: www.tsptalk.com/plus.php
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
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Posted daily at www.tsptalk.com/comments.php
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 may use additional methods and strategies to determine fund positions.
| Daily TSP Funds Return
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One thing about big moves like this is that it can be as emotional for those in stocks as well as those out of stocks. And with our TSP, if you were out of stocks yesterday, you could do nothing. Even if you had an IFT left, the rally started after the IFT deadline so chasing when the rally started would put even another day behind.
Historically the largest daily gains almost always come after the largest losses and during bear markets. I believe I heard that yesterday's gains in the S&P was the best one day gain since October 2008, one of the worst months ever for stocks, and that bear market did not bottom until March of 2009.
As great as the day was, and it could have legs, there are obvious technical targets that could pose a problem.
The S&P 500 (C-fund) has a lot of resistance near 5520, 5550, and 5675. These are obstacles and yesterday's gains while promising, is no guarantee that the bear is done. The high volume is a very good indication that we have bottomed, but history suggests retests of the lows in the coming days or weeks are possible. So while I was looking for a snap back rally, now that yesterday's rally happened, I am very aware of the potential that we could fail at some of those resistance levels, and even give back some or all of those gains before this mess is over. Investors now have 90 days of wondering what happens next while waiting for the pause in tariffs to run out.
The bond market is acting funny to me. The 10-year Treasury Yield closed well off its highs but before it reversed lower, it blasted through the overhead resistance rather easily, closing right on some of that old resistance. And look at the move in the BND (F-fund) in the next chart...
It was up 0.23% on the day, which is a decent move for bonds, but that was after it fell through support on Tuesday, and was slammed early yesterday before the reversal pushed it back into positive territory. Now the 50-day EMA and that broken support line may try to act as resistance. Why it's behaving this way, I'm not sure. I even heard someone explain it and perhaps it had to do with inflation and China selling bonds, but they were talking in circles, like I often do.
That's all for today. I don't want to over analyze market action that is typical (we expected a rebound), but yet still unpredictable in the short-term.
By the way, the TSP Talk Plus ETF System is up over 40% since April 2nd. You may need some adult diapers if you want to trade leveraged ETFs when the VIX is over 30, but that was fun. Not typical, but fun.
DWCPF (S-fund) followed suit with the rest of the market and closed with a remarkable 10% gain. You can see all of the resistance it will have to deal at 2000, 2100 and then 2200. 2100 looks doable but it may not be a straight line there as we could see some profit taking after a day like Wednesday.
ACWX (I-fund) gained 7% and it moved inside that large open gap. There's resistance here as well, but the biggest problem for the I-fund may be the dollar, which is looking strong again and is at an important pivot point.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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: www.tsptalk.com/plus.php
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
For more info our other premium services, please go here... www.tsptalk.com/premiums.php
To get weekly or daily notifications when we post new commentary, sign up HERE.
Posted daily at www.tsptalk.com/comments.php
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 may use additional methods and strategies to determine fund positions.
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