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TSP Talk Weekly Wrap Up

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A slight net loss ends a three week winning streak for stocks but also hides intra-week drama that divided the week between the bulls and the bears. The bulls had the week out of the gate and the S&P 500 was up more than 1% for the week by Tuesday. In the process stock indices passed the highs established early June. The gains were claimed to be unjustified by analysts that pointed to the top companies carrying the entire market. That became clear Thursday when a sell the news reaction to Microsoft's positive earnings report brought down the big tech names and the indices with them. The week's gains were lost and the selling continued Friday and we saw progressive selling two days in a row for the first time since mid-May.

If you had held your stock position through the week your account did not notice much of a loss for the week. But the last couple days of the week set a tone as we more earnings from big tech names come our way. Next week we will see earnings from Amazon and Alphabet. These companies hold so much weight in the large cap indices that rotation in or out of them will easily move the indices. We are not stock pickers but rather trade funds that represent these indices that are extremely vulnerable to a hand full of companies. This week's action in a hold told us we should expect higher risk next week, but with higher risk potential comes higher growth potential. Assess your risk tolerance and position yourself accordingly.

More disputes between the U.S. and China this week threatens a trade resolution investors have been patiently waiting for; the waiting will have to continue. Investors are also watching the new stimulus bill that is still floating around congress while we approach the August summer break. A second stimulus package is likely already priced in so if it is delayed or cut markets will react.

Bonds were up for the week giving the F-fund a gain of of0.42% to lead the TSP funds. The U.S. stock funds were down less than a half percent but the I-fund was just behind the F-fund as it gained 0.41% for the week.

Here are the weekly, monthly, and annual TSP fund returns for the week ending July 24th:

The SPY (S&P 500 / C-fund) broke through the highs of June that had been a resistance level last week. However the index was back below that trading level by Friday. Failed breakout? The sell-off of Microsoft after positive earnings is a sign that investors are ready to take profit as the big companies are driving the indices higher. However investors are still have appetite for stocks so the money moving out of the big names is likely making its way lagging value stocks. This is overall a healthy move for markets. The C-fund fell 0.27% for the week.

The Dow Completion Index (S-fund) had similar action to large caps but fell slightly more for the week. This goes against the idea that smaller name companies are getting new attention from investors. The counter is the lack of boost the index got in the early week like large caps indices got early in the week. The S-fund lagged the TSP funds with a loss of 0.39% for the week.

EFA (EAFE Index /I-fund) outperformed the U.S. stocks this week with a gains rather than losses. Looking at EFA chart its hard to see the gains but the I-fund has gotten value from the fall in the dollar lately. As the dollar weakens, this index grows more valuable. The I-fund was up 0.41% for the week.

The BND (Bonds / F-fund) ended the week off its highs but continued to climb the tight trading channel of the last four weeks. The index outperformed the stock funds with a gain of 0.42%.

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
Weekly Wrap-Ups Archive
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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.

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EFA (I Fund) (delayed)

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BND (F Fund) (delayed)

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