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TSP Talk Weekly Wrap Up

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Stock indices gapped up and traded in positive territory for the second consecutive week. Liquidity provided by the Fed has been the blood of this rally while optimism of an eventual recovery (no matter how far away) has been the heartbeat. The first half of May had analysts sure that the rally had run its course and the 'bear market' would show its ugly side. The second half including this week demonstrates the market has unreasonable capabilities. Banks had been a lagging and concerning entity in stock indices earlier in the month but have now rejoined the recovery rally to add another leg to the bull stance.

The relentless climb of stocks has pushed through most obstacles in the form of technical resistance and heavy numbers of economic damage. With the large resistance out of the way and the shrinking of economic damage, is it time for the market to actually take a rest? Seems counter intuitive but that seems to be the market's game. Intraday action like the late action Thursday off the weekly highs does give evidence that the market can be spooked; in that case it was the announcement of a press conference held by President Trump that had potential for more geopolitical offense. But the worst case was avoided and dip buyers quickly jumped on the opportunity.

Everyone must be curious what is actually capable of triggering another sell-off or at least put a cap of the recovery rally. It seems there have been a lot of seemingly worthy events like the oil supply crisis and the record unemployment numbers that did not shake this rally. Like I said last week, it may be that the only real threat to this market is another wave of outbreaks of Covid followed by another economic shutdown. This is my opinion and although I think a good pull back would be healthy, I do not wish this to be the case. But the resilience of the V-shape recovery sitting on top of the accumulating risk does not make for good entry points.

All the TSP funds were up for the week as well as the month. The I-fund led the week with a 5.12% gain. The S-fund outperformed for May with an 8.79% gain.

Here are the weekly, monthly, and annual TSP fund returns for the week ending May 29th:

The SPY (S&P 500 / C-fund) gapped up again to start the week leaving the previous gap behind. The index has found its self in a relatively tight rising trading channel but there is the resistance from the April highs above. The 200-day EMA had a strong hold for some time but the index has now spent two weeks above the moving average and the 20-day EMA is surpassing the 200-day EMA value. A test of the 200-day EMA would be nice for entry and to grasp the health of the market. The C-fund was up 3.04% for the week.

The Dow Completion Indices' (S-fund) made its first move above its 200-day EMA. In the process it filled the gap left from March that had been a source of resistance in late April and early May. Another open gap from mid-may now its under the 20-day EMA. The S-fund was up 3.56% for the week.

EFA (EAFE Index /I-fund) gapped up with the other indices but is still striding towards its 200-day EMA and filling its own open gap from March. Despite looking a step behind the other indices from a technical standpoint, the index outperformed this week with a gain of 5.12%

BND (Bonds / F-fund) was up for the week but lagged the TSP stock funds. Friday the index surpassed the highs of April. The 20-day EMA has cut the trading channel in half form early May action. The climb has been steady for the index but will take some time to test the highs of March at this rate. The F-fund was up 0.22% 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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SPY (C Fund) (delayed)

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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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