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TommyIV's TSP Talk Blog

TSP Talk Weekly Wrap Up

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Worst week since 2008, worst month since 2009, and fastest 10% decline from record highs ever; these are just a few noteworthy comparisons of what we saw stocks do this week. Leading up to this week, U.S. stocks were notoriously unshaken by the coronavirus and were producing new highs while the rest of the worlds stocks were selling off. Market players gave credit to the endurance of U.S. stocks in light of the potential economic implications of the new virus, but the reality was stock prices were carrying too much weight and it became unsustainable.

News of the virus outbreak making significant ground in other countries like Italy and South Korea sparked the first of three 1000 point drop days in the Dow this week. Selling continued at unusual rates from there especially after the U.S. Center of Disease Control and Prevention warned that the virus was likely to spread widely throughout the country. The vast sell off was a combination of catching up on what has already happened in regards to the virus as well as the speculations as to what is to come next. There are still so many unknowns have investors wanting no part of if things turn for the worst. Bonds were bought up when investors jumped ship out of stocks. Bond interest rates reached record lows leading to the F-fund adding 1.27% for the week.

Many warn that despite the drastic selling this week, the worst isn't over. The Fed bailing out stocks with stimulus was an argument that kept investors in stocks prior to this week's action. But now its questionable if the Fed has enough ammunition needed to do just that with interest rates already so low. Next week will have the February Jobs Report and will no doubt have everyone's attention. Poor numbers from the report could easily continue the mess, but investors have four trading days prior to the report to navigate.

The U.S. stock TSP funds took the most damage this week and lagging the funds was the S-fund which lost 12.18% for the week. The I-fund was no haven as it fell 8.85%.

Here are the weekly, monthly, and annual TSP fund returns for the week ending February 28th:

The SPY (S&P 500 / C-fund) wiped out the gains the index had slowly accumulated since October. The index initial opened under the 20 and 50-day EMAs but it seemed the lows were likely to be the 200-day EMA. That was not the case. Stocks were not being bought and SPY fell and remained below the 200-day EMA that it hasn't been near since early October. The C-fund dropped 11.45% for the week.

The Dow Completion Indices (S-fund) had very similar action but lagged large caps to put the S-fund down 12.18% for the week. New open gaps were produced but a couple old ones were closed. Its not clear if a bottom has been established for stocks and its very possible it has not. There is a lot of ground for stocks to recover and it won't come at the rate it fell.

EFA (EAFE Index /I-fund) fell to levels it had not traded since August. An open gap from October was filled while the index made some new open gaps. The magnitude of the sell off was less compared to the C and S-fund but the I-fund still dropped a significant 8.85% for the week.

AGG (Bonds / F-fund) was the refuge for stock investors this week. The index continues to accelerate its gains and bond yields have produced record lows. Friday the index surpassed the bounds of the already steep rising trading channel of 2020. A couple of open gaps were left behind but are very much in reach. The F-fund gained 1.27% 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
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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DWCPF (S Fund) (delayed)

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EFA (I Fund) (delayed)

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BND (F Fund) (delayed)

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