TommyIV's TSP Talk Blog

Stocks had their best week since early July all the while the S&P 500 produced a new all time high every day. August kept to its character and stretched prices ever higher. Both the C and S-fund have more than 7% for August with just one day left. Bears who argued that a double top would be the down fall of the S&P 500's rally were left with little much to say other than the market is trading unreasonably. That may be true but so far that doesn't make being a bear prosperous. Things are still shaky under the surface of the top heavy major indices but the added risk has made money for those who embrace it.

Jerome Powell reassured investors Thursday during his speech basically saying the Fed will turn their back on inflation control and feed the economy and the market money until Covid-19 is under control. This is very noble for the money printers but enables market participants and businesses to make 'risky' decisions. This sentiment could feed markets for much longer than reasonable but I imagine has to come with repercussions down the road. To what extent and when that may be is past me but the majority don't care and continue to live by the slogan 'don't fight the Fed'.

Bonds suffered from Powell's speech but their charts were not in great shape to start. The F-fund lagged the TSP funds with a 0.51% loss. The C-fund led the TSP funds with a 3.29% gain for the week.




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




The SPY's (S&P 500 / C-fund) accelerated its rally this week and broke above the rising top of the trading channel of the last two months. That trend line then held as support Thursday when the index pulled back momentarily before continuing its rally after Powell's speech. New highs were made every day this week shattering the illusion that investors would sell as soon as they broke even. The C-fund rose 3.29% this week to outperform the other TSP funds.




The Dow Completion Index (S-fund) had a decent week of gains as well although lagged the C-fund. The index has been following the action of large cap indices and this week it pierced to new highs Friday. The dovishness of the Fed may just feed this index into new territory. The S-fund gained 2.65% for the week.




EFA (EAFE Index /I-fund) gapped up to start the week but topped of its gains once the August highs were matched. The index pulled back from its intraweek highs to partially fill the new open gap. The index did not close the gap before rising again Friday to finish the week 1.69% in gains.




The BND (Bonds / F-fund) broke below its bear flag this week and the dovishness to stocks from the Fed pushed bonds below their 50-day EMA. The 50-day EMA had been a key point of support for some time and its failure to keep its support this week could be a sign that bonds have truly topped for some time. The F-fund lagged the TSP funds with a 0.51% loss 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
www.tsptalk.com
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