03/27/26
The action was poor on Friday with the indices sliding lower all day and closing nears the lows of the day. This has been the story for weeks after 5 consecutive weekly losses for the S&P 500, and the skyrocketing price of oil in March has been the negative catalyst. For whatever reason, the first 2 or 3 days of each week has been bullish, but selling kicked in hard on Thursday and Fridays. How long can this streak last?
Because of the sharp sell off on Thursday and Friday, it is a little surprising that the weekly losses for the C, S, and I-funds were just 2.10%, 0.28%, and 0.35% respectively, but it was because of the big gains earlier in the week. This pattern has been so profound that it's tough to look anywhere else for timing analysis, but as always, as soon as a pattern is recognized and everyone is talking about it, it tends to end quickly.
For what it's worth, the S&P 500 has closed lower for five straight weeks, but at some point during the week, it was positive - almost always in the first 3 trading days of the week.
Here is a 30 minute chart during the last 6-weeks showing how pronounced this pattern has been - up early in the week, down late, with a clear trend lower.
Too bad we only get 2+ transactions per week because, while I have been noticing this pattern of late, I have been caught like a deer in headlights knowing once you sell using your 2nd transfer, you are done. The reason that this has bitten me is because I have been expecting a bottom some time in March based on some seasonality data, and the fear was missing a snap back rally, rather than playing it safe - which in hindsight would have been the better move.
March has a reputation of being a month that has often produced the low for the year, although during midterm election years, it has only been a temporary bottom with another low, on average, showing up in late September / early October.
2020 wasn't a midterm election year, but even during that disastrous year - in every possible regard, the stock market turned around in dramatic fashion - in March.
The previous midterm election year was in 2022. I've showed this chart before to illustrate that stocks don't usually go straight down, even during bear markets (although 2020 did exhibit that characteristic for about a month), but in this case I am showing that the midterm year decline bottomed in early October. There was a rally in March but in that year April was a tough month.
To button that up, we may not have seen the market low for the year yet, and that could be many months away, but don't expect stocks to go down every day, week, or month until then.
However, we may need some help from the price of oil, which has been calling the shot in recent weeks. Oil up, stocks down. Oil down, stocks up. It has mostly been oil up in March.
If we go back to 1990 we had a similar situation brewing in the Middle East when Iraq invaded Kuwait. 1990 was also a midterm election year. Not only did that market decline bottom in early October...
... but the decline in stocks was triggered by the price of oil more than doubling from July to October. So, the stock market may be in trouble until the the price of oil stops moving higher. By the way, the decline from peak to trough in the S&P 500 was about 20% in 1990.
The S&P 500 (C-fund) broke down to a new leg lower on Friday, testing the bottom of the recent trading channel. Again, it's a new week and the indices have done well from Monday through Wednesday in recent weeks, and that trend will be challenged today.
The chart is broken but there are plenty of indications that we are seeing extremes that could be ready to to some backing and filling on the upside. Not that the bottom is in or that the worst is over, but we could see some temporary relief, and when it happens, with so many people being bearish right now, it could be a surprisingly big gain.
Additional TSP Fund Charts:
DWCPF (S-fund) remains in a downtrend off the head and shoulders pattern. It is below the 200-day average and clinging to a double bottom at the moment. There's not a lot of good here except that it is so bad that it is due for some relief.
ACWX (I-fund) also tested the prior low as it sits just above its 200-day average. Friday's loss put the fund into negative territory for the year, after the tremendous start.
BND (bonds / F-fund) closed flat and well off the lows after the 200-day average gave it some support. Like stocks, bonds are oversold and due for some kind of bounce, but oil must cooperate.
Thanks so much for reading! 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 use additional methods and strategies to determine fund positions.
The action was poor on Friday with the indices sliding lower all day and closing nears the lows of the day. This has been the story for weeks after 5 consecutive weekly losses for the S&P 500, and the skyrocketing price of oil in March has been the negative catalyst. For whatever reason, the first 2 or 3 days of each week has been bullish, but selling kicked in hard on Thursday and Fridays. How long can this streak last?
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Because of the sharp sell off on Thursday and Friday, it is a little surprising that the weekly losses for the C, S, and I-funds were just 2.10%, 0.28%, and 0.35% respectively, but it was because of the big gains earlier in the week. This pattern has been so profound that it's tough to look anywhere else for timing analysis, but as always, as soon as a pattern is recognized and everyone is talking about it, it tends to end quickly.
For what it's worth, the S&P 500 has closed lower for five straight weeks, but at some point during the week, it was positive - almost always in the first 3 trading days of the week.
Here is a 30 minute chart during the last 6-weeks showing how pronounced this pattern has been - up early in the week, down late, with a clear trend lower.
Too bad we only get 2+ transactions per week because, while I have been noticing this pattern of late, I have been caught like a deer in headlights knowing once you sell using your 2nd transfer, you are done. The reason that this has bitten me is because I have been expecting a bottom some time in March based on some seasonality data, and the fear was missing a snap back rally, rather than playing it safe - which in hindsight would have been the better move.
March has a reputation of being a month that has often produced the low for the year, although during midterm election years, it has only been a temporary bottom with another low, on average, showing up in late September / early October.
2020 wasn't a midterm election year, but even during that disastrous year - in every possible regard, the stock market turned around in dramatic fashion - in March.
The previous midterm election year was in 2022. I've showed this chart before to illustrate that stocks don't usually go straight down, even during bear markets (although 2020 did exhibit that characteristic for about a month), but in this case I am showing that the midterm year decline bottomed in early October. There was a rally in March but in that year April was a tough month.
To button that up, we may not have seen the market low for the year yet, and that could be many months away, but don't expect stocks to go down every day, week, or month until then.
However, we may need some help from the price of oil, which has been calling the shot in recent weeks. Oil up, stocks down. Oil down, stocks up. It has mostly been oil up in March.
If we go back to 1990 we had a similar situation brewing in the Middle East when Iraq invaded Kuwait. 1990 was also a midterm election year. Not only did that market decline bottom in early October...
... but the decline in stocks was triggered by the price of oil more than doubling from July to October. So, the stock market may be in trouble until the the price of oil stops moving higher. By the way, the decline from peak to trough in the S&P 500 was about 20% in 1990.
The S&P 500 (C-fund) broke down to a new leg lower on Friday, testing the bottom of the recent trading channel. Again, it's a new week and the indices have done well from Monday through Wednesday in recent weeks, and that trend will be challenged today.
The chart is broken but there are plenty of indications that we are seeing extremes that could be ready to to some backing and filling on the upside. Not that the bottom is in or that the worst is over, but we could see some temporary relief, and when it happens, with so many people being bearish right now, it could be a surprisingly big gain.
Additional TSP Fund Charts:
DWCPF (S-fund) remains in a downtrend off the head and shoulders pattern. It is below the 200-day average and clinging to a double bottom at the moment. There's not a lot of good here except that it is so bad that it is due for some relief.
ACWX (I-fund) also tested the prior low as it sits just above its 200-day average. Friday's loss put the fund into negative territory for the year, after the tremendous start.
BND (bonds / F-fund) closed flat and well off the lows after the 200-day average gave it some support. Like stocks, bonds are oversold and due for some kind of bounce, but oil must cooperate.
Thanks so much for reading! 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 use additional methods and strategies to determine fund positions.
