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TommyIV's TSP Talk Blog

TSP Talk Weekly Wrap Up

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The logic behind the market gets scrambled again after the worst jobs report in history sparks gains in stocks. The economy and stock market continue to move in opposite directions. But is that really abnormal? The jobs report numbers were old news to investors who were watching the weekly jobless claims so low expectations were already in place. Fear of mission out (FOMO) still reigns as a major driving force for the market thanks to the collective idea that the economy is bound for a quick recovery. Support from the Federal Reserve and the U.S. government in economic aid have investors confident that we will return to the economy we were in just months ago as soon as next year. Investors who believe this paradigm must see stock prices at a discount price despite the economic data and earnings reports which suggest stock prices are too high. But the investor is more focused on the future than the present and it seems optimism about where things are headed is keeping buyers active.

We also have the tech giants that naturally were less affected by social distancing to keep markets afloat. The tech heavy Nasdaq has now climbed back into positive territory for the year. Other stocks are being bought because they actually are being discounted and buyers are looking to snatch up good deals. Also stocks have remained a hot item because there is really no alternative. Bonds have grown stagnant with low yields while momentum for more than a month has been in favor of stock investors.

This climb in stock prices can not last forever but it can and has lasted longer than seems reasonable. The stock indices charts the TSP funds follow still have challenges from a technical point of view. There is also the chance that we are in a much large hole than we think and investors will be surprised when we can't climb out as easily as most predict. Its frustrating for those who have been on the sidelines of this rally. What's difficult about investing in stocks is obviously that's is an unpredictable game. You want to grow your money but your main priority is to protect your capital. Everyone's risk tolerance is different and its highly determined by how close you are to retirement and if you have the time to regain lost capital. So decide your risk tolerance first then decide what paradigm you belong to about the future of this economy.

The TSP stock funds were all up but to different degrees. The S-fund led the funds with a 6.62% gain for the week. More earnings from small cap names are on the way next week. Bonds were down a third a percent for the week to lag the all the TSP funds.

Here are the weekly, monthly, and annual TSP fund returns for the week ending May 8th:

The SPY (S&P 500 / C-fund) opened the week lower but its lows were matched with its 20-day EMA. From there the index climbed its way to the 200-day EMA where it struggled to trade above just as it did the previous week. If it doesn't make the move above the 200-day EMA soon it will be wedged between it and the consistent support of the 20-day EMA. Open gaps are wanted to be filled in both directions of the current price. The C-fund was up 3.57% for the week.

The Dow Completion Indices (S-fund) also began is its week by finding support in its 20-day EMA and then had a impressive climb for the rest of the week. The difference from SPY is the index is not reaching its 200-day EMA for resistance but has been held at bay by the bottom of an open gap from March for the second time. Open gaps do tend to get filled but we do sometimes see them as a significant price that the index can't justify trading back above. Not surprising but the incoming earnings report may set the tone going forward this coming week. The S-fund led the TSP funds with a 6.62% gain for the week.

EFA (EAFE Index /I-fund) rose off the lows marked just below its 20-day EMA but its following action lagged that of the C and S-fund. The index found resistance at its 50-day EMA. The rising trading channel it is currently in will soon wedge the index above its 50-day EMA if it keeps. If not we may see an opportunity for the index to close the gaps left behind in the last couple months. The I-fund was up 1.94% for the week.

AGG's (Bonds / F-fund) progressed lower mid-week but the small trading range persists. The 20-day EMA kept the prices of bonds from retreating further but the index price did fall below a trend line. The index is not far off its highs but with stocks relentless comeback it seems bonds are growing to be a harder buy. The F-fund fell 0.34% 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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