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TSP Talk Weekly Wrap Up

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Stocks continued to be bought this week giving the indices their fourth consecutive week of gains. Four weeks ago it would have seemed foolish to think stocks could make the comeback they have from the December lows. The relentless upside action of January has seemed strange; top analyst have been warning of a pull-back since the beginning of the month. Recent warnings of any unexceptional earnings report being the trigger of a sell-off were dead wrong for the first week of earnings season. Instead good earnings reports from banks were celebrated while poor earnings from Netflix and news of Tesla job cuts were shrugged off and the indices did not follow.

The fears that investors had at the end of last year have seemed to vanish. There is talk, although nothing is official, of progress made in the trade deal with China. The optimism has lifted a weight off of traders and the new fear is being left out of stocks when a deal is made. Investors have also gained confidence since the more dovish tone the Fed has taken the last month.

Despite what may be driving stocks prices higher, the fear now is stocks will soon be overbought setting up another substantial sell-off when the markets attempt to correct themselves. A slight pull-back would be a 'healthy' move for the market in the eyes of analysts. But nothing tells us that the past will resemble the future. Old patterns are not destined to repeat themselves and the nature of market action is an ever evolving process.

More earnings reports will be coming next week so we will find out how much more investors are willing to buy. Markets will be closed Monday for Martin Luther King Jr. Day.

The C-fund outperformed the TSP funds with a gain of 2.9% while the S-fund was not far behind. The F-fund fell 0.19% for the week to lag the TSP funds pushing the fund into the red for the year.




Here are the weekly, monthly, and annual TSP fund returns for the week ending January 18th:




The SPY (S&P 500 / C-fund) easily cut through its 50-day EMA this week as substantial overhead resistance has not been an issue for the index this month. There is more to come though with the high this week for SPY was its 200-day EMA. We saw that with the 50-day EMA so it is possible for the index to continue higher without a pull-back but it will immediately be met with falling resistance from the trend since October. The C-fund was up 2.9% for the week.




The Dow Completion Index (S-fund) moved above its 50-day EMA as well as falling resistance. It still must stretch higher to test its 200-day EMA. Earnings will drive the index in either direction to continue to test the persistence of the index. The S-fund was up 2.81% for the week.




EFA (EAFE Index /I-fund) jumped above the resistance of the peaks of November but left an open gap below. The next thing to test will be the highs of December. But there is now two open gaps below the current price; one being under the 50-day EMA. The I-fund was up 1.07% for the week.




AGG (Bonds / F-fund) was down for the week as it slowly falls while stocks surge. The index has traded within a tight range that has remained tight since the index jumped in range at the turn of the year. The 20-day EMA is just below the current price to test for support. The F-fund was down 0.19% for the week and is now in the read by just 0.01% for the year.




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/a>br>Facebook | Twitter

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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EFA (I Fund) (delayed)

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BND (F Fund) (delayed)

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