After a day of calm, volatility kicked in again and on Tuesday and the Dow experienced another triple digit loss. Percentage-wise it wasn't as bad as the 140-point loss looks, particularly for the small caps and the I-fund, but the S&P 500 did lose almost 1%.
[TABLE="align: center"]
[TR]
[TD="align: center"]
[/TD]
[TD="align: center"] Daily TSP Funds Return
[TABLE="align: center"]
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
We mentioned yesterday that the I-fund was due for some payback and the 0.37% loss shows that, but because most of the losses in the U.S. indices came in afternoon trading - after the international market's closed - the I-fund will likely pay some back with today's closing price.
The losses were very modest in morning trading, when the small caps were actually positive, but afternoon news reports of a buildup in Russian troops and comments from a Polish politician saying Russia is poised to invade or pressure militarily Ukraine's eastern border, sent stocks reeling. If there was a positive it was that buyers stepped up and later and the Dow closed 60-points off the lows of the day.
An interesting observation is that the normal safe havens when stocks fall - bonds, gold, and even oil when you consider the trouble in the Middle East and Russia - are not really rising. That's kind of curious.
The SPY (S&P 500 / C-fund) tested last Friday's lows and I noticed that the last 3 days looks similar to the lows in April. Another big down day and that comparison goes out the window. The SPY has closed below the 50-day EMA for a third straight day and that has the warning flags waving. We saw four closes below the 50 EMA in April before the market started to rebound.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Russell 2000 is also creating a similar formation to a spring low, but the problem is that it looks a lot like a bear flag, which normally don't break to the upside. In May it did. It has now closed below the 200-day EMA for 4-straight days despite moving above it intraday yesterday - before the news out of Russia. They outperformed so it seems like they want to move higher from here. But again, we could be at the mercy of geopolitical news headlines.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) shows the bear flag more clearly and I don't like the looks of that, but in May it was not a problem, so perhaps the rising support line (black) can hold here?
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Unlike the I-fund's tracking index (the EAFE), the EAFE Index ETF, the EFA (that's a lot of acronyms) fell 1.28% yesterday and that is why our I-fund will have do some paybacks today. The EFA tested and so far held at the 200-day EMA yesterday.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The VIX (Volatility Index) has spiked up over the last several days and this weekly chart (each candlestick represents a week's movement) is now testing the 200-week EMA. Prior spikes soared above the 200 EMA (red), but all were short-lived. If this pattern is going to continue it could mean we get another short, but strong sell-off before the market rebounds or, if we get what we saw in March and April of this year where the weekly bar chart did not make it above the 200-week EMA (green), we could be near a low already.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Bonds remain a safe haven but they are not exactly rallying like you might expect during a stock market sell-off. As I mentioned earlier, neither is gold, and oil is not rising despite trouble in two of the largest oil producing areas in the world. Is that a bullish sign for stocks?
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the Sentiment Survey Results and its 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
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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.
[TABLE="align: center"]
[TR]
[TD="align: center"]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
We mentioned yesterday that the I-fund was due for some payback and the 0.37% loss shows that, but because most of the losses in the U.S. indices came in afternoon trading - after the international market's closed - the I-fund will likely pay some back with today's closing price.
The losses were very modest in morning trading, when the small caps were actually positive, but afternoon news reports of a buildup in Russian troops and comments from a Polish politician saying Russia is poised to invade or pressure militarily Ukraine's eastern border, sent stocks reeling. If there was a positive it was that buyers stepped up and later and the Dow closed 60-points off the lows of the day.
An interesting observation is that the normal safe havens when stocks fall - bonds, gold, and even oil when you consider the trouble in the Middle East and Russia - are not really rising. That's kind of curious.
The SPY (S&P 500 / C-fund) tested last Friday's lows and I noticed that the last 3 days looks similar to the lows in April. Another big down day and that comparison goes out the window. The SPY has closed below the 50-day EMA for a third straight day and that has the warning flags waving. We saw four closes below the 50 EMA in April before the market started to rebound.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Russell 2000 is also creating a similar formation to a spring low, but the problem is that it looks a lot like a bear flag, which normally don't break to the upside. In May it did. It has now closed below the 200-day EMA for 4-straight days despite moving above it intraday yesterday - before the news out of Russia. They outperformed so it seems like they want to move higher from here. But again, we could be at the mercy of geopolitical news headlines.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) shows the bear flag more clearly and I don't like the looks of that, but in May it was not a problem, so perhaps the rising support line (black) can hold here?
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Unlike the I-fund's tracking index (the EAFE), the EAFE Index ETF, the EFA (that's a lot of acronyms) fell 1.28% yesterday and that is why our I-fund will have do some paybacks today. The EFA tested and so far held at the 200-day EMA yesterday.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The VIX (Volatility Index) has spiked up over the last several days and this weekly chart (each candlestick represents a week's movement) is now testing the 200-week EMA. Prior spikes soared above the 200 EMA (red), but all were short-lived. If this pattern is going to continue it could mean we get another short, but strong sell-off before the market rebounds or, if we get what we saw in March and April of this year where the weekly bar chart did not make it above the 200-week EMA (green), we could be near a low already.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Bonds remain a safe haven but they are not exactly rallying like you might expect during a stock market sell-off. As I mentioned earlier, neither is gold, and oil is not rising despite trouble in two of the largest oil producing areas in the world. Is that a bullish sign for stocks?
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the Sentiment Survey Results and its 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
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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.
