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TSP Talk Weekly Wrap Up

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Stocks fell for the third consecutive week but U.S. stocks rebounded off mid-week lows to keep those losses modest. October has stayed true to its volatile reputation. Stocks had back to back days with more than 1% losses; action we haven't seen since last December's woes. Those losses seemed to be growing into Thursday until indices reversed their action and spent the last two trading days erasing a portion of the early losses.

The trouble started Tuesday when manufacturing numbers were reported to drop to levels not seen in a decade. This sparked a sell-off over following two days fed by recession fears. The market must have oversold too quickly because action flipped less than an hour into Thursday and the momentum carried on. Friday's jobs report helped to continue the late week rally with it being described by some as a 'goldilocks' report. The added jobs came in under expectations while unemployment fell to a 50 year low. The decrease in unemployment was a good sign for the economy but added jobs falling under expectations keeps up the odds of the Fed cutting rates at their next meeting.

Bonds rallied back near the highs and continued to be bought despite investors running back to stocks late in the week. This is a sign that longer term prospects of the economy are still not getting better.

The F-fund led the TSP funds with a gain of 0.82% while all the TSP stock funds lost value. The I-fund underperformed with a loss of 2.16% while the U.S. stock funds were down less than 1%.br>
NNext week is the first full week of the fourth quarter and volatility is expected to be a factor. U.S. and China begin to talk trade again next so rumors and reports will be market movers next week.




Here are the weekly, monthly, and annual TSP fund returns for the week ending October 4th:




The SPY (S&P 500 / C-fund) accelerated the already falling trend of mid to late September. Open gaps were filled this week with one left behind into Friday's rally. What was most significant this week was the complete rebound in momentum that took place early Thursday was as soon as the price met the 200-day EMA . The 200-day EMA held as support multiple times for the index in September so another bounce off gave traders confidence to jump back in. After the early sell-off in the week and a decent attempt to reclaim the losses, the C-fund finished down 0.3% for the week.




The Dow Completion Index (S-fund) had similar action but it fell below the lows of September before rebounding. Most likely the index was reacting to the action in large caps Thursday and followed a step behind. The S-fund was down 0.64% for the week.




EFA (EAFE Index /I-fund) traded in similar fashion to U.S. stocks yet the late week rebound was of lessor magnitude. The index was unable to return to the falling trading channel of September. The I-fund lagged the TSP funds with a loss of 2.16%.




AGG (Bonds / F-fund) was back to being the safe place for investors as volatility has spiked in the new month. What ever the direction of stocks, if volatility continues to be high we will see more jumping into bonds for safety until things settle. Also the good news of the service sector may have given life to stocks but long-term investors did not see it as the saver of the economy. The F-fund led the TSP funds with a gain of 0.82% for the week.




Good luck and thanks for reading. We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at the Market Comments page. If you need more help deciding what to do with your account, perhaps one of our Premium Services can help.


Thomas A Crowley
www.tsptalk.com
Weekly Wrap-Ups Archive
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The legal stuff:/font> 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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SPY (C Fund) (delayed)

(Stockcharts.com Real-time)
DWCPF (S Fund) (delayed)

(Stockcharts.com Real-time)
EFA (I Fund) (delayed)

(Stockcharts.com Real-time)
AGG (F Fund) (delayed)

(Stockcharts.com Real-time)