Sorry. This Monday commentary never got posted in the Forum. Tuesday's will be up in a minute. 
The massacre on Wall Street continued on Friday despite what looked like a strong jobs report. 2200+ Dow points and nearly 1000 Nasdaq points later and we're no longer talking about a correction, but a possible bear market - depending on your definition. Yields came down and helping the F-fund to a modest gain and the I-fund took a beating as well with the dollar rallying significantly.
We came info Friday a little shaken up, but the jobs report was looming and investors were worried about signs of an economic downturn. However the Jobs Report easily beat estimates adding 228,000 jobs in March versus the 130K to 145K expected, yet the stock market wasn't impressed. As a matter of fact you couldn't even find this jobs information on the Wall Street Journal nor CNBC's homepages over the weekend. It's all about tariffs.
And why not, because look what happened to the stock market and the TSP Funds last week.
The TSP Talk Plus System (and I) lost 2.7% last week and I couldn't be happier. I guess I could be happier if I was 100% in the F-fund, but it's been that kind of market where a 2.7% loss was OK.
Depending how I word this next statement it could change one's outlook. Do I want to say:
Despite the huge losses over the last few days and the market's current vulnerability, many historical tendencies suggest some short-term relief should be on its way...
Or:
Many historical statistics suggest some short-term relief could be on its way, however this market remains quite vulnerable.
One sounds more optimistic than the other, yet both are true. The question is whether to approach this week with fear or optimism.
Here's some historical extremes in the same neighborhood that suggest things have come down too far, too quickly.
Source:
How about maximum draw downs in a year versus the year end total return? The average draw down in the S&P 500 since 1950 is 13.6%. This current one is 17.4%. The average year end return, +11.6%.
Source:
Sounds good, but then you look at this waterfall decline and it's not so easy to make that decision to buy. There are several crooked number draw downs of 20%, 30%, and even 49% in that list above so this may not be over yet.
But you can see above, the high trading volume the last couple of days which is a sign of capitulation, and that may continue this morning. The other two spikes in volume on the above chart were quarterly expirations days and we always see that, but Thursday and Friday were the real deal. And it was basically retail investors (people you and me) doing the selling according to this JP Morgan chart.
The weekly chart of the S&P 500 shows the dramatic size of the move compared the action over the last several years. There's plenty of support from 5000 down to 4600, but that's still a lot of potential meat on the downside bone if it tests them.
The futures opened sharply lower again as you would expect after a poor Friday, but look for some kind of relief rally at some point this week, whether later today, Turnaround Tuesday. Sometimes the Sunday night futures are a disaster and by Monday's open the losses are gone. I don't know if that will happen this time, but Monday gaps are tough to trust. Without some kind of a major development in the tariff situation, we probably won't be talking about a "V" bottom anymore, although significant rebounds will be coming soon.
DWCPF (S-fund) took another 5% plus haircut on Friday, but unlike the S&P 500 which closed near its lows of the day, there was some buying on Friday when this index was down near 1800. That has a positive reversal look, but the 5% loss suggests otherwise, and it could easily retest that level before rallying again - but it is a good sign that people were actually buying some of the beaten down small cap names. This won't get up and rally to new highs anytime soon, so the bulls will look for what they can get and filling some of those overhead gaps would be a start.
ACWX (I-fund) took a big hit after a significant gap down at the open on Friday. In the process it filled an old open gap from back in January and Friday's low was testing that prior January low.
The dollar rallied back on Friday from Thursday's major sell off, and that contributed negatively to the I-fund's return.
BND (F-fund) was up modestly on Friday but for some reason over the last three days it has been closing well off its intraday highs. On Friday it broke out above one of the rising resistance lines, but it came back down to close right on top of it. There is more room on the upside to hit the bull flag's (blue) upside target price, but it could come back to test the top of the flag again before resuming a rally.
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.
The massacre on Wall Street continued on Friday despite what looked like a strong jobs report. 2200+ Dow points and nearly 1000 Nasdaq points later and we're no longer talking about a correction, but a possible bear market - depending on your definition. Yields came down and helping the F-fund to a modest gain and the I-fund took a beating as well with the dollar rallying significantly.
| Daily TSP Funds Return
More returns |
We came info Friday a little shaken up, but the jobs report was looming and investors were worried about signs of an economic downturn. However the Jobs Report easily beat estimates adding 228,000 jobs in March versus the 130K to 145K expected, yet the stock market wasn't impressed. As a matter of fact you couldn't even find this jobs information on the Wall Street Journal nor CNBC's homepages over the weekend. It's all about tariffs.
And why not, because look what happened to the stock market and the TSP Funds last week.
The TSP Talk Plus System (and I) lost 2.7% last week and I couldn't be happier. I guess I could be happier if I was 100% in the F-fund, but it's been that kind of market where a 2.7% loss was OK.
Depending how I word this next statement it could change one's outlook. Do I want to say:
Despite the huge losses over the last few days and the market's current vulnerability, many historical tendencies suggest some short-term relief should be on its way...
Or:
Many historical statistics suggest some short-term relief could be on its way, however this market remains quite vulnerable.
One sounds more optimistic than the other, yet both are true. The question is whether to approach this week with fear or optimism.
Here's some historical extremes in the same neighborhood that suggest things have come down too far, too quickly.
Source:
How about maximum draw downs in a year versus the year end total return? The average draw down in the S&P 500 since 1950 is 13.6%. This current one is 17.4%. The average year end return, +11.6%.
Source:
Sounds good, but then you look at this waterfall decline and it's not so easy to make that decision to buy. There are several crooked number draw downs of 20%, 30%, and even 49% in that list above so this may not be over yet.
But you can see above, the high trading volume the last couple of days which is a sign of capitulation, and that may continue this morning. The other two spikes in volume on the above chart were quarterly expirations days and we always see that, but Thursday and Friday were the real deal. And it was basically retail investors (people you and me) doing the selling according to this JP Morgan chart.
The weekly chart of the S&P 500 shows the dramatic size of the move compared the action over the last several years. There's plenty of support from 5000 down to 4600, but that's still a lot of potential meat on the downside bone if it tests them.
The futures opened sharply lower again as you would expect after a poor Friday, but look for some kind of relief rally at some point this week, whether later today, Turnaround Tuesday. Sometimes the Sunday night futures are a disaster and by Monday's open the losses are gone. I don't know if that will happen this time, but Monday gaps are tough to trust. Without some kind of a major development in the tariff situation, we probably won't be talking about a "V" bottom anymore, although significant rebounds will be coming soon.
DWCPF (S-fund) took another 5% plus haircut on Friday, but unlike the S&P 500 which closed near its lows of the day, there was some buying on Friday when this index was down near 1800. That has a positive reversal look, but the 5% loss suggests otherwise, and it could easily retest that level before rallying again - but it is a good sign that people were actually buying some of the beaten down small cap names. This won't get up and rally to new highs anytime soon, so the bulls will look for what they can get and filling some of those overhead gaps would be a start.
ACWX (I-fund) took a big hit after a significant gap down at the open on Friday. In the process it filled an old open gap from back in January and Friday's low was testing that prior January low.
The dollar rallied back on Friday from Thursday's major sell off, and that contributed negatively to the I-fund's return.
BND (F-fund) was up modestly on Friday but for some reason over the last three days it has been closing well off its intraday highs. On Friday it broke out above one of the rising resistance lines, but it came back down to close right on top of it. There is more room on the upside to hit the bull flag's (blue) upside target price, but it could come back to test the top of the flag again before resuming a rally.
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.
