Stocks were hit hard again as the Dow opened the day down about 1100-points. Incredibly, it recovered about 1000 of those points before turning back down and ending the volatile day with a loss of 588-points.
[TABLE="align: center"]
[TR]
[TD="align: center"]
[TD="align: center"][/TD]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
Once again I am not in my office and sitting in the Denver airport so I have limited abilities with charts, etc., so I'll make this quick.
After a bad week like we had last week, mom and pop investors read their Sunday papers and decided it was time to get out, and when everyone runs to the exit at once, you get an opening on Monday morning like the one we had yesterday. That was a classic example of capitulation and while we may have put in the lows with that wash out, there is always the chance of testing the lows. It's not necessary - we could get a "V" bottom, but tests of lows - that hold of course - tend to produce very strong bottoms.
I see the futures are flying high as I write this Monday night with the Dow futures up nearly 400 but I wouldn't put that in the bank just yet. Volatility is likely still not done. We're at a point where technical analysis isn't the best way to determine short-term direction. It is all about fear and greed now - at least until things settle down. Volatility should remain high while dip buyers are jumping in and the "sell the rally" traders are doing their thing. It will be a battle for a few days.
The F-fund was given a small gain but the AGG bond ETF was actually down, as was gold, so I don't see this being similar to the 2008 financial crisis. People were selling but apparently holding cash, which could be ammunition for the next rally.
The SPY (S&P 500 / C-fund) closed higher than it opened, but short of that, not much good going on here. Yesterday's low seemed like a classic capitulation low but testing the lows is always possible.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The short-term indicators are clearly extremely oversold...
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
And the VIX hit numbers not seen since the bear market of 2008-2009.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (bonds / F-fund) was down slightly after some healthy early gains while stocks were tanking early on.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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
Thanks for reading, and thanks for your patience while I was away. I'll be back in my office Tuesday. We'll see you back here tomorrow.
Tom Crowley
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 use additional methods and strategies to determine fund positions.
