06/03/13
Stocks were floating near the break-even area for most of the day on Friday, but an afternoon sell-off took the indices deep into negative territory, with most of the damage being done in the final minutes of trading.
[TABLE="align: center"]
[TR]
[TD]
[/TD]
[TD="align: center"]Daily TSP Funds Return[TABLE="width: 156"]
[TR]
[TD]G-Fund:[/TD]
[TD="align: right"]+0.0043%[/TD]
[/TR]
[TR]
[TD]F-fund:[/TD]
[TD="align: right"]-0.16%[/TD]
[/TR]
[TR]
[TD]C-fund:[/TD]
[TD="align: right"]-1.43%[/TD]
[/TR]
[TR]
[TD]S-fund:[/TD]
[TD="align: right"]-1.02%[/TD]
[/TR]
[TR]
[TD]I-fund:[/TD]
[TD="align: right"]-2.00%[/TD]
[/TR]
[/TABLE]
[TABLE="align: center"]
[TR]
[TD]More returns [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
Here are the final TSP Fund returns for the month of May.
As we mentioned on Friday, the first trading day in June has been very wild over recent years. Here are the gains and losses in the Dow on the first trading day in June since 2008:
2012: -275
2011: -279
2010: -112
2009: +221
2008: -135
Five years in a row of triple digit moves for the Dow with 3 of the 5 being 200+ point moves - one positive and two negative.
Clearly the rest of the investment world were reading TSP Talk and saw this on Friday and made their way to the exit before Friday's close so they could be on the sidelines for this year's first trading day in June. OK, that's probably not what happened, but we did get a 200-point move with a large chunk if that loss coming in the final 15-minutes of the trading day. Coincidence? The rumor for the drop was that there are growing concerns that the Fed will pull the reigns in on their liquidity party sooner rather than later.
The late sell-off on Friday took the S&P 500 below the 20-day EMA and its lowest close in about three weeks. We may have seen the start of a new downtrend and the 50-day EMA is the next likely support area - if we even see a move that low. The 50-day EMA has held all year so that will be a big test for the 2013 bull market should it come to that.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The longer term weekly chart shows that resistance from the long-term rising trading channel has been tested and should that continue to hold, one concerning bearish scenario is the possibility of the S&P coming down to test the lower end of the rising trading channel - currently near 1350, which is also near the 200-day EMA.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
There's plenty of support before that 1350 area would enter the picture, but this is something to consider for the summer of 2013 - particularly if the Fed does tighten their belts in the coming weeks.
The NYSE overbought / oversold indicator moved past the -500 level, which is very oversold in a bull market. Over the last few years, most of the -500 readings produced imminent bottoms and subsequent rallies, but the ones that did not led to some dramatic losses. So the odds are we could see a bottom in the coming days, but if we don't... lookout.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds put in their worst month in two years in May but the 7 to 10 year Bond ETF did produce a kangaroo-tail reversal near the close on Friday.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Yields have rallied quite a bit in the last few weeks and they may be due for a pullback (which would be a rally for bonds and the F-fund). But this Bond ETF is in a clear downtrend and its trading below the 200-day EMA so while we may be due for a little relief rally in bonds, the longer-term bond market picture is not looking all that bullish.
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.
Stocks were floating near the break-even area for most of the day on Friday, but an afternoon sell-off took the indices deep into negative territory, with most of the damage being done in the final minutes of trading.
[TABLE="align: center"]
[TR]
[TD]
[TD="align: center"]Daily TSP Funds Return[TABLE="width: 156"]
[TR]
[TD]G-Fund:[/TD]
[TD="align: right"]+0.0043%[/TD]
[/TR]
[TR]
[TD]F-fund:[/TD]
[TD="align: right"]-0.16%[/TD]
[/TR]
[TR]
[TD]C-fund:[/TD]
[TD="align: right"]-1.43%[/TD]
[/TR]
[TR]
[TD]S-fund:[/TD]
[TD="align: right"]-1.02%[/TD]
[/TR]
[TR]
[TD]I-fund:[/TD]
[TD="align: right"]-2.00%[/TD]
[/TR]
[/TABLE]
[TABLE="align: center"]
[TR]
[TD]More returns [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
Here are the final TSP Fund returns for the month of May.
As we mentioned on Friday, the first trading day in June has been very wild over recent years. Here are the gains and losses in the Dow on the first trading day in June since 2008:
2012: -275
2011: -279
2010: -112
2009: +221
2008: -135
Five years in a row of triple digit moves for the Dow with 3 of the 5 being 200+ point moves - one positive and two negative.
Clearly the rest of the investment world were reading TSP Talk and saw this on Friday and made their way to the exit before Friday's close so they could be on the sidelines for this year's first trading day in June. OK, that's probably not what happened, but we did get a 200-point move with a large chunk if that loss coming in the final 15-minutes of the trading day. Coincidence? The rumor for the drop was that there are growing concerns that the Fed will pull the reigns in on their liquidity party sooner rather than later.
The late sell-off on Friday took the S&P 500 below the 20-day EMA and its lowest close in about three weeks. We may have seen the start of a new downtrend and the 50-day EMA is the next likely support area - if we even see a move that low. The 50-day EMA has held all year so that will be a big test for the 2013 bull market should it come to that.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The longer term weekly chart shows that resistance from the long-term rising trading channel has been tested and should that continue to hold, one concerning bearish scenario is the possibility of the S&P coming down to test the lower end of the rising trading channel - currently near 1350, which is also near the 200-day EMA.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
There's plenty of support before that 1350 area would enter the picture, but this is something to consider for the summer of 2013 - particularly if the Fed does tighten their belts in the coming weeks.
The NYSE overbought / oversold indicator moved past the -500 level, which is very oversold in a bull market. Over the last few years, most of the -500 readings produced imminent bottoms and subsequent rallies, but the ones that did not led to some dramatic losses. So the odds are we could see a bottom in the coming days, but if we don't... lookout.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds put in their worst month in two years in May but the 7 to 10 year Bond ETF did produce a kangaroo-tail reversal near the close on Friday.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Yields have rallied quite a bit in the last few weeks and they may be due for a pullback (which would be a rally for bonds and the F-fund). But this Bond ETF is in a clear downtrend and its trading below the 200-day EMA so while we may be due for a little relief rally in bonds, the longer-term bond market picture is not looking all that bullish.
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.
