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TSP Talk Weekly Wrap Up

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Stocks had a week of volatile oscillation commonly seen after a quick correction period. Indices were mixed in weekly results; large caps (C-fund) were up while small caps (S-fund) were down producing lower lows. The C-fund gained 0.65% for the week but that number is less impressive compared to the 4.6% gain the fund had on Monday alone. It was a record single day point gain for major indices but it was the start of a week of swings and its highs were not challenged much more for the rest of the week. The early gains were completely erased by Friday's open after the jobs report was a reason to sell despite the lack of threatening numbers. A late rally at the end of Friday was what pushed large caps back into positive territory for the week.

The Federal Reserve had its first emergency cut since 2008 on Tuesday slashing its rates by half a percent. The urgency of the rate cut did not put investors at ease, rather it flourished the idea that the economy is in real trouble. This correction is different than the other corrections seen the last few years. We saw a technical destruction thanks to over extended indices over months but the kicker this time was the Covid-19 which is still running its course, entering the United States, and its real impact is still unknown. In past corrections a low is established and market rebuild from there. But its questionable now whether the markets have reached their lows. Bond yields reaching record lows does not tell us investors are ready to jump back into stocks long-term. Volatility will remain high especially has we start to get news of deaths and new cases of the virus in the United States.

The F-fund gained more during this week of swings is stocks than it did in the initial pull-back. The F-fund was up 1.9% for the week. The S-fund lagged with a loss of 1.69%. The C-fund was the only TSP stock fund to end the week in positive territory for the week.

Here are the weekly, monthly, and annual TSP fund returns for the week ending March 6th:

The SPY (S&P 500 / C-fund) was up more than 4% on Monday and was quickly back above its 200-day EMA. Intraday highs the following trading days filled an open gap but the last two days of the week erased the early gains. A late rally into Friday's close gave the index its gain for the week. A test of the lows seems like what is next for this index. At least that would establish the ground work if the lows hold. But with the potential for more bad news concerning the virus outbreak and the economy more selling wouldn't be a surprise. Either way expect more wild action like this week to come. The C-fund was up 0.65% for the week.

The Dow Completion Indices (S-fund) lagged this week. It lagged on the Monday rally and it lagged on the late Friday comeback seen in large caps. This index produced lower lows Friday and even fell below October lows during intraday trading. The 200-day was not traded above nor was the corresponding open gap filled like in the SPY. The result was the S-fund lagging the TSP funds with a loss of 1.69%.

EFA (EAFE Index /I-fund) did not produce lower lows but did close at its lower price than last week. The fund lost 0.39% for the week after selling off with U.S. stocks the last two trading days of the week.

AGG (Bonds / F-fund) has been relentless and outperforms what seems logical; but that is the power of fear. The positive yield of U.S. Treasury bonds are being flooded with buyers and that has driven yields to record lows. The index gapped up Friday opening above an already steep trading channel. The price did return to the trading channel top but the open gap was left open. The F-fund led the TSP funds with a gain of 1.9%.

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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