Stocks opened lower last week, but buyers stepped up after the Fed minutes were released on Wednesday. Now the market is experiencing something we didn't see much of in 2013; Investors and traders are selling the rallies. We are starting to see the breakdown of some charts and that has my attention.
Here are the weekly, monthly, and annual TSP fund returns through Friday, April 11. Quite a bit of red in those stock funds.
Unlike some of the other major indices, the SPY (S&P 500 / C-fund) is still within its long-term rising trading channel, but we did see it fall through some important support - the high from the end of 2013, and also the 50-day EMA, always a warning sign, and there's enough here to be concerned about.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) is another story. Its long-term trading channel has now been broken and when the small caps and the Nasdaq (not shown) start to breakdown, it could be a sign that the bull market is in trouble.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Over the last couple of years we have been programmed to expect the market to bottom and rebound after each significant pullback, and we really haven't had a 10% correction in quite some time. We are now starting to see some breakdowns in the charts and perhaps the 10% correction has begun. The Nasdaq and the small caps can be more volatile than the S&P 500 so perhaps they are just needing a little more room to get this selling out of their system. The problem is, the S&P 500 has a lot of room to move down, even if it stays within its trading channel. Perhaps it is time to sell the rallies until the Nasdaq and small caps tell us they can recapture some of those support lines they have given up.
Bonds have risen as investors are seeking safety. It's a typical reaction to a sell-off in stocks. But the 20+ year bond fund is testing its recent highs and whether it can take out that high might determine not only if bonds are going to continue to rally, but if investors are willing to favor bonds over stocks while stocks are getting cheaper.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Good luck,thanks for reading! We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at TSP Talk Market Commentary.If you need some help deciding what to do with your account, perhaps one of our premium services can help.
Tom Crowley
www.tsptalk.com
Weekly Wrap-UpsArchive
Facebook | Twitter
Thelegal stuff: This information is for educational purposes only! This is not advice or are commendation. 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.
