06/20/13
The volatility continued yesterday with the market reacting negatively to Fed and Ben Bernanke's policy statement, and press conference. By the close the Dow had fallen 206-points and the losses were steep on all major indices.
[TABLE="align: center"]
[TR]
[TD]
[/TD]
[TD="align: center"] Daily TSP Funds Return[TABLE="width: 155"]
[TR]
[TD="align: right"] G-Fund:[/TD]
[TD] +0.0050%[/TD]
[/TR]
[TR]
[TD="align: right"] F-fund:[/TD]
[TD] -0.60%[/TD]
[/TR]
[TR]
[TD="align: right"] C-fund:[/TD]
[TD] -1.38%[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:[/TD]
[TD] -1.32%[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:[/TD]
[TD] -1.87%[/TD]
[/TR]
[/TABLE]
[TABLE="align: center"]
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The Fed didn't say anything that was a surprise. There were no new talks of tapering their bond buying policy, just a reiteration of the same plan as before. The market simply rallied for a week leading up to this FOMC meeting and it just seemed like the market had a "sell the news" reaction.
S&P 500 broke down from the very short-term rising wedge (blue) while the old descending resistance line on the triangle held as support for now - although the indices did close at their lows so the support may have held only because time ran out on the trading day.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
I am taking a few liberties with the 1987 / 2013 chart comparison - moving the goal posts a little to fit the situation, but in general we are seeing the S&P hold above the longer-term rising support line for now after breaking below the rising wedge (blue). This is 2013...
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
And this is 1987.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The next test for the market will be to see how it handles that rising support should the downside action continue.
This recent action put us somewhere within the small square on the chart below. Big test for the 1987 theory coming up.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bond yields rallied during this stock market sell off yesterday. That's not what most were expecting since the F-fund has usually been a safe haven when stocks were going down.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Rising yields means lower bond prices and a lower F-fund. The 7 - 10 year bond ETF made another lower low.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Since it is business as usual for the Fed, does that mean we should expect the status quo of buyers stepping in to buy this dip? That seems like reasonable expectation, but of course I'm playing it safe until the 1987 comparison falls apart and that hasn't happened yet.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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.
The volatility continued yesterday with the market reacting negatively to Fed and Ben Bernanke's policy statement, and press conference. By the close the Dow had fallen 206-points and the losses were steep on all major indices.
[TABLE="align: center"]
[TR]
[TD]
[TD="align: center"] Daily TSP Funds Return[TABLE="width: 155"]
[TR]
[TD="align: right"] G-Fund:[/TD]
[TD] +0.0050%[/TD]
[/TR]
[TR]
[TD="align: right"] F-fund:[/TD]
[TD] -0.60%[/TD]
[/TR]
[TR]
[TD="align: right"] C-fund:[/TD]
[TD] -1.38%[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:[/TD]
[TD] -1.32%[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:[/TD]
[TD] -1.87%[/TD]
[/TR]
[/TABLE]
[TABLE="align: center"]
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The Fed didn't say anything that was a surprise. There were no new talks of tapering their bond buying policy, just a reiteration of the same plan as before. The market simply rallied for a week leading up to this FOMC meeting and it just seemed like the market had a "sell the news" reaction.
S&P 500 broke down from the very short-term rising wedge (blue) while the old descending resistance line on the triangle held as support for now - although the indices did close at their lows so the support may have held only because time ran out on the trading day.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
I am taking a few liberties with the 1987 / 2013 chart comparison - moving the goal posts a little to fit the situation, but in general we are seeing the S&P hold above the longer-term rising support line for now after breaking below the rising wedge (blue). This is 2013...
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
And this is 1987.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The next test for the market will be to see how it handles that rising support should the downside action continue.
This recent action put us somewhere within the small square on the chart below. Big test for the 1987 theory coming up.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bond yields rallied during this stock market sell off yesterday. That's not what most were expecting since the F-fund has usually been a safe haven when stocks were going down.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Rising yields means lower bond prices and a lower F-fund. The 7 - 10 year bond ETF made another lower low.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Since it is business as usual for the Fed, does that mean we should expect the status quo of buyers stepping in to buy this dip? That seems like reasonable expectation, but of course I'm playing it safe until the 1987 comparison falls apart and that hasn't happened yet.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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.
