TommyIV's TSP Talk Blog

This week started with a gap down in stock indices and continued selling intraday until it produced the worst day for equities in months. It seemed reasonable that fear had given the bears the advantage; but surprisingly Monday's sell-off turned into a buying opportunity. The rest of the week stocks rose erasing most of the damage done Monday. By close on Friday the TSP stock funds were mixed; the I-fund produced gains while the C and S-fund kept losses for the week with the S-fund lagging more than 1% below the C-fund.

The action this week was focused on recent trade disputes. Tweets and news headlines provoked reactions. The bears have established that it is not April anymore while the bulls are pushing back as indices surf the technical turbulence between moving averages. It's anyone's' guess as to how long until indices find a direction again or what direction that will be. For those who buy and hold this is frustrating set-up for stocks. This kind of action is more suitable for day traders and market timers who will attempt to think ahead of the market.

Bonds outperformed for the week with many running for safety during this time of greater uncertainty. The breakdown of a trade deal has taken away a vital part of the formula that has kept stocks on the rise for the year. The breakdown also comes ahead of the summer months that tend to lack the vitality of the rest of the year. Fears of declining global growth are back on the table as they were in late 2018 but for now some investors still find reasons to buy.




Here are the weekly, monthly, and annual TSP fund returns for the week ending May 17th:




The SPY (S&P 500 / C-fund) fell below its 50-day EMA this week but was able to end the week above it in attempt to recover early losses. The 20-day EMA held as resistance to keep stocks from turning the week into gains. Although it was on a shorter time frame, the action in May reminds me of the decline the first week of March that temporarily gave the bears some life following the trade issues at that time. That early sell-off was shrugged off and buying continued. This week we came off a week of losses which carried into Monday but the bulls were back to work. How much will the bulls shrug off before they step back? The C-fund fell 0.69% for the week.




The Dow Completion Index (S-fund) fell to its 200-day EMA Monday which is where it closed for the day. By Thursdays close the index had passed its 50-day EMA and found resistance at its 20-day EMA. The index couldn't keep the upward momentum and closed back between the 50 and 200-day EMA for the week. The S-fund lagged the TSP funds despite being less affected by trade tariffs. This could be a sign that trade disputes are also an excuse to relieve the pressure on buyers before things get out of hand. The S-fund fell 1.71% for the week.




EFA (EAFE Index /I-fund) also came back from early gap down and found resistance from moving averages and may even have built the boundaries of a declining trading channel. The TSP gave the I-fund a gain of 0.24% for the week to be the only stock fund in positive territory for the week.




AGG (Bonds / F-fund) has traded higher with uncertainty in stocks. The index may have come off its highs for the week while stocks were regaining steam but bonds still came out of top for the week. The F-fund was up 0.33% for the week to outperform the TSP funds. The index has continued its momentum for months which is a sign investors do not completely trust the future of the economy.




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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