TSP Talk Blog

Three months and counting

The market continues to defy logic - that logic being that markets do not go straight up (or straight down) but since the 1st of December, we are virtually seeing just that. How long can it continue, and should you fight it?

For the TSP, the C-fund gained 1.10% on the week, the S-fund was up 1.31%, and the I-fund picked up 2.06% as the dollar pulled back. Bonds (F-fund) rebounded nicely from their recent slide, adding 0.42% on the week, and the G-fund was up 0.06%.



For the month of February, the C-fund is now up 4.59%, the S-fund has gained 6.08%, and the I-fund up 3.83%. Bonds (F-fund) are still down 0.59%, and the G-fund is up 0.14%.

What else can be said? Look at this chart. It is certainly unsustainable, but who knows when it will end? It could be Monday, it could be next month. I don’t recommend fighting it but I also wouldn’t chase here either.


Chart provided courtesy of www.decisionpoint.com

Of course how you approach this market, or any other market, depends on your retirement situation. The older you are and the more you are dependent on your TSP balance as a form of income, the fewer chances you want to take. If you are young and a long way from retirement, you are in a better position to take a risky position.

The F-fund looks like it may be in for some trouble. This is a chart of the yield of the 10-year Treasury Note. Yields move inversely to bond prices and the F-fund. The chart seems to be showing the yield finding support at the old breakout point just under 3.6%, and at the 20-day exponential moving average.



Should these levels hold, it is a bearish (negative) sign for bond prices and the F-fund.

The I-fund bounced back last week with the help of weakness in the dollar. There are some key support levels under the dollar right now, and if they don’t hold, the technical picture on the dollar will deteriorate further.


Chart provided courtesy of www.decisionpoint.com

It could not get above the 50-day EMA and it is now trading below the 20-day EMA. This looks like a recipe for further downside action, and this makes the I-fund more attractive.

That doesn’t mean the I-fund will go higher. But it could very well mean that the I-fund will outperform the C and S funds over the intermediate-term, whether stocks are moving up or down.

Good luck, and thanks for reading. We will be back here next week with another TSP Wrap Up.

Tom Crowley
www.tsptalk.com
Weekly Wrap-Ups Archive

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