Stocks gave up some early gains as the bearish activity continues with more selling after an initial bounce off the CPI report. The Dow gave up a triple digit gain to close down 327-points with Apple's 5% loss being a drag on most of the major indices. Bonds were up as the yield on the 10-yer Treasury fell back below 3%. Oil and the metals were up, while bitcoin continues to slide lower.
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The S&P 500 (C-fund) turned a good day into another sell off and it appeared that the weakness in Apple may have been one of the catalysts because the CPI was not that bad compared to estimates, although maybe it wasn't good enough either. Again, the lack of a high volume capitulation kind of a day may be what is missing. We are in a down trend and the bear market could last a while - we don't know, but we do know that stocks don't tend to go straight down forever.
THE DWCPF (S-fund) was up much of the morning but just couldn't hold up as the waterfall like decline continued.
I heard something a little disturbing about the EFA (I-fund) on Wednesday. Pete Najarian pointed out on CNBC some unusual options activity in the EFA, of all things, with big (outlier size) put bets on the downside. That's a bold move in market that has come down this far already with virtually no bounced recently.
BND (bonds / F-fund) rallied showing a little life but it is still within the long term descending channel.
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
To get weekly or daily notifications when we post new commentary, sign up HERE.
Thanks for reading. 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.
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The CPI came in near estimates, which was high, but slightly lower than last month giving the market a couple of hours of relief where stocks rallied but eventually rolled over as it has been doing for weeks. We'll get the PPI report this morning before the opening bell and the estimates are looking for a gain of 0.5% over last month. The April report was 1.4% so this is an easing of prices. April's year over year gain was 11.2% and investors would like to see a much smaller number.
The sell off in crypto currencies recently has certainly added to the "risk off" approach to stocks. When they were rallying a couple of years ago, that sentiment rolled into the stock market as the wealth effect of those huge gains added to the bullish bias of the stock market. Now with crypto and the high flying tech stocks that led the market higher faltering, the bearish sentiment is permeating throughout the market.
When that happens and prices continue to slip, it feeds on itself in the form of margin calls which creates forced selling, and fear begets fear until mom and pop finally give up on the stock market. I've been saying that for a lot longer than I expected as apparently we haven't seen that kind of capitulation yet.
I've mentioned this before that sometimes the market goes down for reasons that most of us are not even aware of yet. There may be something like that going on now whether it has to do with Russia/Ukraine, China, the supply chain issues, food shortages, you name it. We're not really talking about that. We're talking about inflation and interest rates. But that too has got to be a big role as it impacts a market that had been given 0% interest rates for almost 15 years and the Fed and government have been spending and lending money at will that we all kind of knew it would unravel at some point, but it just never seemed to happen. Well, maybe it's happening.
All five of the "old" FAANG stocks (Facebook, Apple, Amazon, Netflix, Google) are now down 20% off their highs so that is officially in a bear market for them, and of course they were the ones that had held up best in recent years while we saw small caps lag and really foreshadow this weakness.
I've been mentioning the lack of capitulation type of volume that tends to accompany a turn around, but but one place we are seeing some of that now is in the ARK Innovations ETF which tracks big tech. Maybe this is a sign of some giving up.
Being that stocks are down so much, the risk should be less today than it was a week or month or two ago, but no one knows exactly when the lows will be in. And by lows I'm not saying the bear market bottom, but even just a respectable bounce that lasts more than just a few hours or a couple of days.
We may just need to see one or two of those Covid crash type of days where the Dow loses 1500 - 2000 points in a day or back to back days, and finally exhausts anyone who was planning on holding onto their stocks, but finally give up.
---------------------------------------------------
Yesterday I talked about the TSP transition dates into the new system and when the TSP may be down for trading. We still don't know exactly but at this point my guess is they won't process IFTs from May 26 - May 31.
Today I will talk about the cost and qualifications for the new mutual fund options. I mentioned before that there will be plenty of fees involved. This is from the proposal of changes which has been adopted:
The mutual fund window is designed for TSP participants who are interested in greater investment flexibility. If your account meets certain eligibility criteria, you can choose to access a selection of more than 5,000 mutual funds. As with most mutual funds, this flexibility comes with fees:
• $55 annual fee to ensure that use of the mutual fund window does not indirectly increase TSP administrative expenses for TSP participants who choose not to use the mutual fund window.
• $95 annual maintenance fee
• $28.75 per trade fee
• Other fees and expenses specific to chosen mutual funds
If you choose to invest through the mutual fund window, your initial investment must be at least $10,000, and you may not invest more than 25% of your total account in the mutual fund window.
This means you can only get into the mutual funds if your account has a balance of $40,000 or more. It also means you also can't put all of your money into the mutual funds, so if your plan was to move your entire balance into a crypto or gold fund, that can't happen.
We still don't even know what funds will be available, but there will be somewhere near 5000 to choose from, so that should be interesting - and confusing to many of us. For that reason our TSP Talk AutoTracker will not make any changes. It would be too daunting of a task to attempt to track these funds.
Here's more information on the changes: [url]https://www.federalregister.gov/documents/2022/01/26/2022-01312/mutual-fund-window
[/URL]
The sell off in crypto currencies recently has certainly added to the "risk off" approach to stocks. When they were rallying a couple of years ago, that sentiment rolled into the stock market as the wealth effect of those huge gains added to the bullish bias of the stock market. Now with crypto and the high flying tech stocks that led the market higher faltering, the bearish sentiment is permeating throughout the market.
When that happens and prices continue to slip, it feeds on itself in the form of margin calls which creates forced selling, and fear begets fear until mom and pop finally give up on the stock market. I've been saying that for a lot longer than I expected as apparently we haven't seen that kind of capitulation yet.
I've mentioned this before that sometimes the market goes down for reasons that most of us are not even aware of yet. There may be something like that going on now whether it has to do with Russia/Ukraine, China, the supply chain issues, food shortages, you name it. We're not really talking about that. We're talking about inflation and interest rates. But that too has got to be a big role as it impacts a market that had been given 0% interest rates for almost 15 years and the Fed and government have been spending and lending money at will that we all kind of knew it would unravel at some point, but it just never seemed to happen. Well, maybe it's happening.
All five of the "old" FAANG stocks (Facebook, Apple, Amazon, Netflix, Google) are now down 20% off their highs so that is officially in a bear market for them, and of course they were the ones that had held up best in recent years while we saw small caps lag and really foreshadow this weakness.
I've been mentioning the lack of capitulation type of volume that tends to accompany a turn around, but but one place we are seeing some of that now is in the ARK Innovations ETF which tracks big tech. Maybe this is a sign of some giving up.
Being that stocks are down so much, the risk should be less today than it was a week or month or two ago, but no one knows exactly when the lows will be in. And by lows I'm not saying the bear market bottom, but even just a respectable bounce that lasts more than just a few hours or a couple of days.
We may just need to see one or two of those Covid crash type of days where the Dow loses 1500 - 2000 points in a day or back to back days, and finally exhausts anyone who was planning on holding onto their stocks, but finally give up.
---------------------------------------------------
Yesterday I talked about the TSP transition dates into the new system and when the TSP may be down for trading. We still don't know exactly but at this point my guess is they won't process IFTs from May 26 - May 31.
Today I will talk about the cost and qualifications for the new mutual fund options. I mentioned before that there will be plenty of fees involved. This is from the proposal of changes which has been adopted:
The mutual fund window is designed for TSP participants who are interested in greater investment flexibility. If your account meets certain eligibility criteria, you can choose to access a selection of more than 5,000 mutual funds. As with most mutual funds, this flexibility comes with fees:
• $55 annual fee to ensure that use of the mutual fund window does not indirectly increase TSP administrative expenses for TSP participants who choose not to use the mutual fund window.
• $95 annual maintenance fee
• $28.75 per trade fee
• Other fees and expenses specific to chosen mutual funds
If you choose to invest through the mutual fund window, your initial investment must be at least $10,000, and you may not invest more than 25% of your total account in the mutual fund window.
This means you can only get into the mutual funds if your account has a balance of $40,000 or more. It also means you also can't put all of your money into the mutual funds, so if your plan was to move your entire balance into a crypto or gold fund, that can't happen.
We still don't even know what funds will be available, but there will be somewhere near 5000 to choose from, so that should be interesting - and confusing to many of us. For that reason our TSP Talk AutoTracker will not make any changes. It would be too daunting of a task to attempt to track these funds.
Here's more information on the changes: [url]https://www.federalregister.gov/documents/2022/01/26/2022-01312/mutual-fund-window
[/URL]
The S&P 500 (C-fund) turned a good day into another sell off and it appeared that the weakness in Apple may have been one of the catalysts because the CPI was not that bad compared to estimates, although maybe it wasn't good enough either. Again, the lack of a high volume capitulation kind of a day may be what is missing. We are in a down trend and the bear market could last a while - we don't know, but we do know that stocks don't tend to go straight down forever.
THE DWCPF (S-fund) was up much of the morning but just couldn't hold up as the waterfall like decline continued.
I heard something a little disturbing about the EFA (I-fund) on Wednesday. Pete Najarian pointed out on CNBC some unusual options activity in the EFA, of all things, with big (outlier size) put bets on the downside. That's a bold move in market that has come down this far already with virtually no bounced recently.
BND (bonds / F-fund) rallied showing a little life but it is still within the long term descending channel.
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
To get weekly or daily notifications when we post new commentary, sign up HERE.
Thanks for reading. 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.
