Stocks gave back Tuesday's gains on Wednesday and the bulls have not been able to put together two consecutive positive days for stocks since February 11th and 12th - a month ago. The Dow lost 1465-points on the day and the S&P 500 gave up 140-points after Tuesday's 136-point gain, while the Nasdaq gave up all but 2 points of Tuesday's 394 point gain.
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Very little was spared as surprisingly, even gold and bonds were down sharply yesterday. We knew why bonds were down on Tuesday while stocks were rallying, but they failed to come back when stocks gave back those gains on Wednesday.
This has been a quick move to the downside for stocks, and I'd imagine one of the fastest moves, if not the fastest, from all-time highs to a bear market ever. What does this tell us?
For one thing, those who were panic selling a week or two weeks ago, something that is usually a poor decision, have been right so far.
Those "dumb money" sentiment type indicators measured by things like put / call ratios, fear and greed indicators, confidence in a rally indicators, and sentiment surveys... have been right so far.
It also tells us that those perpetuating the fear (I'll call them hawks) have been successful in doing so. I just checked and it looks like about 1135 people in the U.S. have now contracted the coronavirus, and 32 people have died... out of 330 million people -- and the stock market is collapsing? The power of fear, I guess.
On the other hand, the market was extended and due for a correction, and this could be the excuse for the cleansing. But how much is enough and how much is too much within a matter of weeks?
How much of an opportunity is for those sitting in cash right now, or is this just the start of something even worse? That's what we're all trying to weigh now. Make no mistake about it, this is a poor market - a bear market in the Dow according to those who use the 20% measure. That means we need to be more defensive, but that doesn't mean there won't be short-term buying opportunities for those of you who like to time things. It's dangerous but it can be rewarding if you're not selling fear and buying greed.
The S&P 500 (C-fund) tanked again after Tuesday's giant rally. It's been a crazy back and forth lately but the bears are getting the better of the bulls all month. The close above the prior lows is interesting, but to be honest, every positive technical analysis sign over the last two weeks has produced the opposite result from what the chart might normally indicate. We seem to be passed the T/A and into complete emotional reactions at this point.
The DWCPF (S-fund) has been struggling worse than the large caps during this downturn. I wish I knew if they will snap back faster, or lag, when this thing finally turns around.
Looking a chart from 2007 into 2008 when the last bear market was starting to get into gear, we saw a 35% decline start off one of the peaks in early September. Ouch! We got not one, but two 18% rallies off the lows in the coming weeks. The bear wasn't over, but a grab back of close to 50% of the current drop is not out of the question. The problem is it could give some the false impression that the worst is over, and as we saw in 2008, it wasn't.
The VIX was up sharply but it's trying to stabilizing below that 55 area.
The AGG (bonds / F-fund) tanked for a second straight day, and as I mentioned above, it seemed a little odd since the AGG and the S&P 500 have been moving in opposite directions almost every day recently. Yesterday they were both down sharply. The loss took it below those resistance lines (red) that I thought could hold, and it is now trying to find support at the 50-day EMA.
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
Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
Like what you're seeing on TSP Talk? Why not Tell a Friend about us? We'd really appreciate it, and they may too. Thanks!
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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[TD="align: center"] Daily TSP Funds Return
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[TD][/TD]
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Very little was spared as surprisingly, even gold and bonds were down sharply yesterday. We knew why bonds were down on Tuesday while stocks were rallying, but they failed to come back when stocks gave back those gains on Wednesday.
This has been a quick move to the downside for stocks, and I'd imagine one of the fastest moves, if not the fastest, from all-time highs to a bear market ever. What does this tell us?
For one thing, those who were panic selling a week or two weeks ago, something that is usually a poor decision, have been right so far.
Those "dumb money" sentiment type indicators measured by things like put / call ratios, fear and greed indicators, confidence in a rally indicators, and sentiment surveys... have been right so far.
It also tells us that those perpetuating the fear (I'll call them hawks) have been successful in doing so. I just checked and it looks like about 1135 people in the U.S. have now contracted the coronavirus, and 32 people have died... out of 330 million people -- and the stock market is collapsing? The power of fear, I guess.
On the other hand, the market was extended and due for a correction, and this could be the excuse for the cleansing. But how much is enough and how much is too much within a matter of weeks?
How much of an opportunity is for those sitting in cash right now, or is this just the start of something even worse? That's what we're all trying to weigh now. Make no mistake about it, this is a poor market - a bear market in the Dow according to those who use the 20% measure. That means we need to be more defensive, but that doesn't mean there won't be short-term buying opportunities for those of you who like to time things. It's dangerous but it can be rewarding if you're not selling fear and buying greed.
The S&P 500 (C-fund) tanked again after Tuesday's giant rally. It's been a crazy back and forth lately but the bears are getting the better of the bulls all month. The close above the prior lows is interesting, but to be honest, every positive technical analysis sign over the last two weeks has produced the opposite result from what the chart might normally indicate. We seem to be passed the T/A and into complete emotional reactions at this point.
The DWCPF (S-fund) has been struggling worse than the large caps during this downturn. I wish I knew if they will snap back faster, or lag, when this thing finally turns around.
Looking a chart from 2007 into 2008 when the last bear market was starting to get into gear, we saw a 35% decline start off one of the peaks in early September. Ouch! We got not one, but two 18% rallies off the lows in the coming weeks. The bear wasn't over, but a grab back of close to 50% of the current drop is not out of the question. The problem is it could give some the false impression that the worst is over, and as we saw in 2008, it wasn't.
The VIX was up sharply but it's trying to stabilizing below that 55 area.
The AGG (bonds / F-fund) tanked for a second straight day, and as I mentioned above, it seemed a little odd since the AGG and the S&P 500 have been moving in opposite directions almost every day recently. Yesterday they were both down sharply. The loss took it below those resistance lines (red) that I thought could hold, and it is now trying to find support at the 50-day EMA.
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
Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
Like what you're seeing on TSP Talk? Why not Tell a Friend about us? We'd really appreciate it, and they may too. Thanks!
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.
