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TSP Talk Weekly Wrap Up

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The August CPI report knocked the wind out of the bulls rally early this week and sparked a sell-off that would erase the gains from previous week by Friday. We talked last week about the importance of this CPI report and how it would be a market mover. Well it certainly was as the market had its worst day of the year on Tuesday after its release. The Consumer Prices Index rose 8.3% from the previous August (2021). Although this was lower than the previous two months' CPI increases, it was more than the expected 8.1%. More important to investors was the core CPI, which excludes energy and food prices, which was up sharply from July showing investors the persistence of inflation. A drop in energy prices was expected to bring along a broad decrease in prices for consumers but this was not the case. This triggered a swift change in sentiment, and few wanted to buy stocks ahead of certain FOMC rate hike that will happen next week.

That was not the only economic defeat considered this week. Friday the market reacted poorly to FedEx reporting major spending cuts including jobs to make up for the sharp pull-back in revenue and future projections. This tells investors that the Federal Reserve's rate hikes are already having the expected economic restrictions that has been the root to the market's decline. The C and S-fund now face their July lows headed into a week where the Fed will tighten monetary policy further. The July lows may be price range where buyers could jump in collectively but it's uncertain. What is also possible is the Fed upgrading their expected 0.75% rate increase to a 1.00% rate increase; a move that would be devastating to those exposed to stocks.

The S-fund lagged the TSP funds with a loss of 4.92% this week. The F-fund fell nearly 1% for its fifth straight week of losses. The stock charts below are very similar but also each has a unique situation from the next.

The FOMC policy decision will come Wednesday, September 21st.

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Here are the weekly, monthly, and annual TSP fund returns for the week ending September 16:

SPY's (S&P 500 / C-fund) rally from the previous week continued through Monday this week, but the chart quickly made a pivot to eventually fall to a its lowest price since July 18th. This was a big letdown to the bulls who had thought last week's rally was the beginning of a V-shaped bounce to erase the losses of the last month. Instead the ETF gapped down Tuesday following the CPI report and the price sank further through the day. One day of gains Wednesday rewarded dip buyers but selling continued Thursday and Friday. The C-fund ended the week with a loss of 4.73% to push the TSP fund down for the month after a successful start.

The Dow Completion Index (S-fund) had a similar week to SPY but lagged the large cap ETF and the S-fund lagged the TSP funds with a loss of 4.92% for the week. Another major difference is the S-fund did not reach a new low like the C-fund. The current S-fund price is higher than a recent low established September 6th. But open gaps hang above while little technical support comforts would be buyers.

EFA (EAFE Index / I-fund) gapped up to start the week and followed it up Tuesday with a gap down. The rest of the week the ETF fell to fill the open gap established last week. The I-fund ended the week at a low but remains above the low of July 14th. The I-fund fell 2.98% this week accumulating less damage than the C and S-funds.

We need to step back to a four-month chart to look at BND (Bonds / F-fund). The bond ETF continues its falling trajectory and fast approaching the June low. The F-fund closed this week to establish a new short-term low of $18.37. The low established in June's sell off was $18.30. Can that price mean anything to investors to end this chart's suffering? We will soon find out. The last two weeks we see a pattern the BND chart where a gap down gets 'partially' filled but not enough to satisfy us. There is an obvious open gap from mid-August, but we know it may be months before that gap is filled. Both the 20 and 50-day EMAs stand between the current price and that open gap. The F-fund fell 0.92% to extend its weekly losing streak to five weeks.

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
Last Look Report
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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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Updated 09-19-2022 at 12:04 AM by TommyIV

TSP Talk Weekly Wrap Ups


S&P500 (C Fund) (delayed)

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DWCPF (S Fund) (delayed)

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EFA (I Fund) (delayed)

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BND (F Fund) (delayed)

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