It was an ugly day for the TSP stock funds. By the close, if you were evenly distributed between the 3 TSP stock funds, your account will be lower by 2.49%. That’s a big hit to take and many people believe it’s a bad idea to sell on a down day. Here’s the thing. Momentum almost certainly changed today. We haven’t seen a 2%+ move to the downside on the C fund since the top in September 2020. Add to that, support at the 10DMA failed on all 3 funds and the technical indicators have turned decidedly negative. Finally there’s Volume… The first chart below puts some perspective to just how many shares traded hands today as the market was tanking. This kind of HUGE negative volume on the Nasdaq Composite Index doesn’t happen because individuals are selling. This happens when large money managers, hedge funds, pension funds… sell. This is not a one day event. Did we just lock in a 2.49% loss? Yes we did. But, we also locked in months worth of very nice gains!
The Nasdaq Composite Index is the U.S. broad technology index. It has been on an absolute tear since the March lows. Volume is the number of shares that change hands. On a day when the price is down, the volume color is red. When the price is up, the volume color is black. Look at the red volume days when the market crashed in Feb/Mar. Today’s volume was DOUBLE the worst days of the Feb/Mar crash! LOTS of shares traded today…
On the C fund chart, you can see that we haven’t seen anything like this daily price decline since the September high. That was the beginning of a 2 month A-B-C correction to the November low.
The S fund gapped down at the open, attempted a reversal, then closed almost at the bottom of the day’s trading range. We will likely see the S fund at its 50DMA before getting back above its 10DMA.
The I fund had a similar gap down as the S fund with the added problem of closing below its lower near term support at 74. The best hope is that the I fund finds support at its 50DMA.
Bottom Line: I would be surprised if this was a single day event. There was too much downside volume for the markets to turn up on a dime. Having said that, stranger things have happened. I intend to sit on the sidelines in the G fund and look for support at the 50DMA. If the C fund does not find support at its 50DMA then we have a much bigger problem. We will discuss in depth during this weekend’s Weekly Update Show!