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TommyIV's TSP Talk Blog

TSP Talk Weekly Wrap Up

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A five week winning steak for stocks ends with a two day pull back ahead of the holiday weekend. Buying accelerated Wednesday but was followed by a steep pull back in the indices. The broad indices have become top heavy with the outperforming tech companies. The tech sector had ended the week with corrective action and brought the indices with it. After the selling continued into Friday morning the dip buyer decided it was time to get to work and a snap-back rally Friday took the indices off the lows produced that morning. It's still a favorable environment with stocks with low interest rates, and fiscal stimulus still feeding investors appetite for stocks.

You could look at this week's action as a healthy consolidation and buying opportunity. The economy is still in recovery mode but the consistent gains in stocks had become unsustainable. There is the chance the selling isn't over but the appearance of dip buyers Friday and the lack of major news catalysts to link to the selling gives it a feel of a necessary consolidation. We saw similar moves in stocks in June and the indices eventually carried on with the rally.

The tech sector had become too overbought too quickly but that doesn't mean the sector doesn't still have the favorable foundation in a time where people are trying to avoid interaction. Investors will be looking closer at these big tech names now to evaluate if they are still valued correctly.

Bonds led the TSP funds with a slight gain of 0.17%, but that was after the F-fund gave back most of its gains it accumulated through the week on Friday. The S-fund lagged after falling 3.12% for the week.




Here are the weekly, monthly, and annual TSP fund returns for the week ending September 4th:




The SPY's (S&P 500 / C-fund) had turned from to a steady climb the last month to a accelerated buying Wednesday which was the selling opportunity many needed to spark the pullback. The index fell below its 20-day EMA Friday morning but turned around before testing the 50-day EMA.



The lows on Friday were also the old high prior to the covid sell off in February. This established further support at this price. We saw a similar pullback in June but it didn't last long before the index was back on track of its recovery rally.




The Dow Completion Index (S-fund) lagged this week but also had an impressive turnaround intraday Friday. The index spent some time below its 50-day EMA before the dip buyers showed up.




EFA (EAFE Index /I-fund) broke out of its flat trading channel Friday morning but dip buyers came in to buy the index at its 50-day EMA to push the price back within that trading channel. The index did end the week below its 20-day EMA but was better off than the U.S. stock indices with a loss of 1.4% compared to the 2.27% and 3.12% loss in the C and S-funds.




The BND (Bonds / F-fund) was regaining ground after breaking below a bear flag the previous week. Most of the recovered gains were lost Friday when the index fell back to its 50-day EMA leaving an open gap. The F-fund did lead the TSP funds for the week with a gain of 0.17%



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
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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Comments

  1. SoonerCaniac's Avatar
    The lows on Friday were also the old high prior to the covid sell off in February.
    Excellent catch TommyIV; thanks for the observation!

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BND (F Fund) (delayed)

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