TommyIV's TSP Talk Blog

A surge in stocks Friday put the indices into positive territory for the new year. The surge came after the worst two day start to a year since 2000. Apple reported a sales warning for the last quarter and put some blame on the China and U.S. trade quarrels. Apple investors were obviously not too happy with the warning and with Apple being such a big contributor to large cap indices, stocks fell sharply and traded poorly after to add fears that the turmoil of December was continuing into January.

Moods were shifted with futures trading up overnight into Friday to open higher in front of a better than expected jobs report. To put the cherry on top Jerome Powell gave a more dovish tone than expected at a conference where he spoke with previous Fed Chairmen. In all, the combo led to a more than a 3% day in large cap stocks and pushed indices all over 1% for the new year.

Entering a new year and even a new quarter seems to always bring a new theme to the market. Just as the fourth quarter of 2018 had its own character than what traders had seen the previous three of 2018. The reversal was a good sign that could attract more investors into stocks. Although the major indices charts have a lot of work before they are in the clear. There is a lot of falling trends and resistance above current prices. But a lot of damage was done to stocks in the last quarter of the year and it may be time for stocks to reclaim their value. Its a new year, new quarter, and a new market.

All the TSP funds were in the green for the week with the S-fund leading with a 2.78% gain. The F-fund lagged but still added 0.46%.




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




The SPY (S&P 500 / C-fund) was in a bull flag coming into Friday and the conditions were perfect for the index to break above it. Notice though that the highs of the day were at the 20-day EMA level. With more than a 3% surge on a single day its hard to expect the market to exceed that level but this could push back going into the next week. The S-fund was up 1.9% for the week.




The Dow Completion Index (S-fund) also made highs at its 20-day EMA Friday but had the best performance on the day and the week. We will see if this reversal can give the indices the momentum to reach above its 20-day EMA. Its very possible.




EFA (EAFE Index /I-fund) did surge above its 20-day EMA Friday and left an open gap behind. Its highs were at the bottom of an open gap. The index will face its 50-day EMA along with a falling trend line if it continues higher to close the open gap above. The I-fund gained 2.22% for the week.




AGG (Bonds / F-fund) had a big day Thursday following the Apple sell-off but pulled back Friday as traders moved back into stocks for the day. The index moved above the top resistance line of its trading channel before moving back within it Friday.



Thursday also marked new all time highs for index. Although the recent gains have been quick, the fourth quarter action for bonds have giving the index hope of continuing its bull market marathon that looked to be in trouble most of last year. The F-fund gained 0.46% 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
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