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TommyIV's TSP Talk Blog

TSP Talk Weekly Wrap Up

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Welcome to October. Most were given their second reality check this year of the risk in stock investing. It was a case of the butterfly effect where the true beginning is nearly impossible to pinpoint but left investors and analysts pointing their finger at high bond yields sparking the technical unwinding of stocks. We saw small caps begin to unwind last week and finally large caps were unable to hang on. The sell-off started Wednesday and continued Thursday.

Bonds were the safety net this week and the F-fund finished with a decent gain of 0.44% with traders retreating from stocks. Economic data showed a slow down in the pace of inflation which helps support bond prices because it helps maintain the future purchasing power of the debt’s fixed principal and interest payments.

All the TSP stock funds were down significantly for the week with the greatest fall coming from the S-fund which was down more than 5%. Both the C and I-fund were down around 4% for the week. The good news is the action this week may have opened up buying opportunity in stocks, at least in the short-term, right in front of earnings season. I'm speaking for the courageous though. Investors have to keep in mind that a lot of stock charts were left in poor technical condition. It won't be an easy recovery but we did slowly come back from this situation in February. Can we come back from a second melt-down or is this getting toppy?




Here are the weekly, monthly, and annual TSP fund returns for the week ending October 12th:




The SPY (S&P 500 / C-fund) dropped down to its 200-day EMA and even closed below it Thursday. The index did come back Friday to close above it. This is a good sign for large caps and may give other traders an idea that the 200-day EMA marks a good low.



The 200-day EMA has been reliable support earlier in the year but this was the first test for the trend line since the beginning of May. We can expect for volatility in this index as it attempts to correct itself to the appropriate price like we saw in February. The C-fund lost 4.07% for the week.




The Dow Completion Index (S-fund) continued its ugly freefell this week and fell through its 200-day EMA easily. Large cap traders will keep this in mind. This has left the chart with some ugly technical damage that will be difficult to attract buyers soon. The S-fund took the greatest loss for the TSP funds as it was down 5.04% for the week and now 8.09% for October.




EFA (EAFE Index / I-fund) followed the fall of U.S. stocks and fell below the lows of the last couple months. We saw some stabilization on Friday but its highs were marked by a falling trend line which is not attractive. This chart has a lot of work to do to bring it back to life. It is not like we haven't seen the I-fund outperform before but we have to wonder if the damage this week was too much for even the swing traders. The I-fund was down 3.92% for the week.




AGG (Bonds / F-fund) jumped back into its trading channel it fell out of last week. That isn't the greatest news given that the trading channel is falling a decent rate. Yields are high and stocks are correcting so its a good time for bond markets. It just may not be a long term move. But who really knows? The F-fund was up 0.44% to outperform the other TSP funds 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: 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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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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