TommyIV's TSP Talk Blog

Coronavirus fears overshadowed strong earnings eventually repressing dip buyers. Stocks were down to start the week but with decent earnings from big names such as Amazon, Apple, Microsoft, and Tesla, buyers fought back to erase pull backs induced by coronavirus headlines and worries of the global economic impact the outbreak will leave behind. Well on the last day of the month dip buyers were a no show and stocks saw their worst action since August. The Friday sell-off sent stock indices into negative territory for the year.

A pull back in stock indices has been has been welcomed by both bulls and bears; but for different reasons and with different expectations as to what will come next. Until last week stock indices have been on a steady climb higher for months. The bulls are okay with a mild pull back as it comes with more buying opportunity for the underinvested and is seen as a healthy move in the long run. The bears are using this pull back to confirm their predictions of a large sell-off that is past due for stocks. Talk of the coronavirus's impact on the global economy has added to the bears argument that a recession is coming and its time to exit stocks.

The unknown lies just a couple days away where investors will find out if the correction will continue or if Friday's pull back was the worst going forward. China's market reopens Monday after its holiday's and will have an opportunity to react to the current affairs of the coronavirus. In turn U.S. markets will then react to the reaction. Stocks are not in their best light but there is still underlying support in the charts. The worst pull backs seem to come when least expected and by unforeseen factors. This doesn't seem to be the case at the moment. We have left euphoria and investors are on their toes, not oblivious. Earnings have been celebrated for the most part so some will see this pullback as a great time to jump into stocks that were brought down merely by association with indices.

Bonds outperformed this week while investors are seeking safety while virus drama becomes more clear. The F-fund gained 0.62% for the week while all the TSP stock funds were down more than 2% for the week.




Here are the weekly, monthly, and annual TSP fund returns for the week ending January 31st:




The SPY (S&P 500 / C-fund) opened down Monday below risings support of the last few months as well as its 20-day EMA. This left an open gap behind to start the week was filled the next day when the index was propelled by strong earnings pushing it back above its 20-day EMA. Weakness reappeared Thursday but dip buyers erased most the damage of the open. This all led up to a pull back of 1.76% Friday that was not recovered by dip buyers. This sell-off put the index down for the year and totaled its losses for the week to 2.1%. The 50-day EMA held as support marking the lows.




The Dow Completion Indices (S-fund) had very similar action and it too found its lows Friday just below its 50-day EMA where it settled for the week losing 2.12%. The S-fund ended its first month this year down 0.62%.




EFA (EAFE Index /I-fund) lagged the TSP funds after gapping down Monday. Unlike the charts above, it opened below its 50-day EMA and struggled to trade back above it. This left the open gap created on Monday open and eventually the index fell further Friday toward its 200-day EMA. The I-fund lost 3.13% for the week and ended January down 2.73% to lag the TSP funds.




AGG (Bonds / F-fund) nearly repeated the previous week as more investors ran to safer investments while a collective fear spreads with the coronavirus itself. Another open gap was produced Monday but for this index the gap was up not down. That leaves two open gaps in proximity below the current price. The F-fund outperformed again this week with a gain of 0.62% and ended January up 1.91%.




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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