Another bloodbath on Wall Street with deep losses across the board and every intraday attempt at a bounce was quickly sold as we start to see some panicky activity from investors. The Dow lost 2% but the Nasdaq and small caps continue to take the brunt of the beating. We finally saw investors run for yield and buy bonds, and that's a sign of fear, but it's interesting that other safe havens like gold and silver, sold off sharply as well.
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The S&P 500 (C-fund) lost more than 3% yesterday and that loss was enough to fill a gap that had been open since April of 2021 - more than a year ago. Was that the target? Those blue lines are actually make a parallel channel but in a market as volatile as this, support and resistance don't tend to hold as cleanly as we might like. This is an ugly, ugly market but it wouldn't be a stretch to see a rebound up toward the top of that channel at some point, but the channel is falling fast and it could be down below 4300 in a couple of months.
We looked at the weekly chart of the DWCPF (S-fund / small caps) above, but here's the daily showing yesterday's carnage. More support taken out as it fell to new lows. That makes for a lot of overhead resistance when it tries to eventually rebound back up.
BND (bonds / F-fund) was up and it had a pretty good day as we saw some panic-like selling stocks, and bonds become more attractive, especially when the 10-year Treasury is now yielding over 3%.
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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Bitcoin? Clobbered. Oil? down big. Natural gas, which has been in a monster bull market, was down almost 13% yesterday. They took everything down yesterday, except as I said, bonds. If stocks were down but the money was going elsewhere, I'd get it, but this was one of those kind of days where I feel we all got held up at gun point and someone took our money, almost where ever you had it.
We have a market that doesn't have the Fed to fall back on the way it had since back after the financial crisis. Whenever stocks sold off the Fed chair would come out and do an emergency rate cut, buy bonds, add liquidity, etc., and the market would turn back up in a hurry.
Now, not only do they not have any ammunition left, but their cheap easy money policy for the last 10-15 years is part of what caused the current inflation problem. It just took a lot longer than many economists expected, and the trillions that were spent on Covid stimulus may have finally pushed that over the edge.
So not only do we have rising interest rates, rising inflation, extreme gas prices, some signs economic slowdown, but all of this is coming when the debt bubble seems to finally be popping. As I speculated yesterday it might not be surprising to see some hedge funds go under in an environment like this, but that could be an exclamation point on the downside, and certainly investor sentiment is getting closer to the lower end of the cycle of emotions.
Small caps and the Nasdaq have been taking the brunt of the selling and you can see in this long-term weekly chart of the S-fund how far it has fallen below its 50-week EMA, and now it is just below its 200-week average. We've seen a few corrections over the years stall in this area, but you can see that the two major bear markets easily cut right through that average before rebounding.
Another lopsided trading volume day with more than 90% of the volume on the downside, and more than 2700 new lows on the NYSE and Nasdaq. This is extreme and the 2nd time in a week that we've seen it.
We'll get the CPI report on Wednesday and the PPI on Thursday and those could be market movers as they are good gauges for the inflationary picture.
The volatility should continue. We may get 1000 point swings in the Dow, with some up that will confuse us. Do you buy into a big rally after a decline like this hoping to catch the bottom, or do you sell it if you're in stocks and be happy you got something back? And good luck to us trying to make that decision at in the morning while the indices are swinging up and down all day. And if this type of action continues deeper into May, don't forget that the TSP is shutting down our IFTs at some point this month. Are they, whoever "they" are, trying to scare TSP participants out of their stocks funds before that shutdown, only to take stocks up the week that we can't make any transactions? What, me paranoid?
I'll leave this here as a reminder that the TSP is making big changes over the next few weeks and there will be a significant shutdown in the second half of May that will impact transactions, including our IFTs at some point. You can read more here: TSP is shutting down some transaction as early as May 16t until the first week in June.
From TSP.gov:
Key transition dates
Expected transition dates May 16 to the first week of June
All transactions temporarily unavailable May 26 to the first week of June
Full access and transactions restored First week of June
Contributions and payments will continue during the transition period, your TSP savings will remain invested in the TSP funds you’ve chosen.
Payroll contributions and loan payments will continue.
Installment payments scheduled to be paid May 24 – May 31 will be disbursed early on May 23.
More info
We have a market that doesn't have the Fed to fall back on the way it had since back after the financial crisis. Whenever stocks sold off the Fed chair would come out and do an emergency rate cut, buy bonds, add liquidity, etc., and the market would turn back up in a hurry.
Now, not only do they not have any ammunition left, but their cheap easy money policy for the last 10-15 years is part of what caused the current inflation problem. It just took a lot longer than many economists expected, and the trillions that were spent on Covid stimulus may have finally pushed that over the edge.
So not only do we have rising interest rates, rising inflation, extreme gas prices, some signs economic slowdown, but all of this is coming when the debt bubble seems to finally be popping. As I speculated yesterday it might not be surprising to see some hedge funds go under in an environment like this, but that could be an exclamation point on the downside, and certainly investor sentiment is getting closer to the lower end of the cycle of emotions.
Small caps and the Nasdaq have been taking the brunt of the selling and you can see in this long-term weekly chart of the S-fund how far it has fallen below its 50-week EMA, and now it is just below its 200-week average. We've seen a few corrections over the years stall in this area, but you can see that the two major bear markets easily cut right through that average before rebounding.
Another lopsided trading volume day with more than 90% of the volume on the downside, and more than 2700 new lows on the NYSE and Nasdaq. This is extreme and the 2nd time in a week that we've seen it.
We'll get the CPI report on Wednesday and the PPI on Thursday and those could be market movers as they are good gauges for the inflationary picture.
The volatility should continue. We may get 1000 point swings in the Dow, with some up that will confuse us. Do you buy into a big rally after a decline like this hoping to catch the bottom, or do you sell it if you're in stocks and be happy you got something back? And good luck to us trying to make that decision at in the morning while the indices are swinging up and down all day. And if this type of action continues deeper into May, don't forget that the TSP is shutting down our IFTs at some point this month. Are they, whoever "they" are, trying to scare TSP participants out of their stocks funds before that shutdown, only to take stocks up the week that we can't make any transactions? What, me paranoid?
I'll leave this here as a reminder that the TSP is making big changes over the next few weeks and there will be a significant shutdown in the second half of May that will impact transactions, including our IFTs at some point. You can read more here: TSP is shutting down some transaction as early as May 16t until the first week in June.
From TSP.gov:
Key transition dates
Expected transition dates May 16 to the first week of June
All transactions temporarily unavailable May 26 to the first week of June
Full access and transactions restored First week of June
Contributions and payments will continue during the transition period, your TSP savings will remain invested in the TSP funds you’ve chosen.
Payroll contributions and loan payments will continue.
Installment payments scheduled to be paid May 24 – May 31 will be disbursed early on May 23.
More info
The S&P 500 (C-fund) lost more than 3% yesterday and that loss was enough to fill a gap that had been open since April of 2021 - more than a year ago. Was that the target? Those blue lines are actually make a parallel channel but in a market as volatile as this, support and resistance don't tend to hold as cleanly as we might like. This is an ugly, ugly market but it wouldn't be a stretch to see a rebound up toward the top of that channel at some point, but the channel is falling fast and it could be down below 4300 in a couple of months.
We looked at the weekly chart of the DWCPF (S-fund / small caps) above, but here's the daily showing yesterday's carnage. More support taken out as it fell to new lows. That makes for a lot of overhead resistance when it tries to eventually rebound back up.
BND (bonds / F-fund) was up and it had a pretty good day as we saw some panic-like selling stocks, and bonds become more attractive, especially when the 10-year Treasury is now yielding over 3%.
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Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
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.
