TommyIV's TSP Talk Blog

Fear of missing out drove stock prices to their best weekly advance in three months. Buyers and dip buyers reduced caution and bought up stocks despite a sick president, another bump in the road for covid-19 stimulus deal, and an earnings season projected to expose the damage of the pandemic on companies. Trying to make sense of the optimism is all guess work and involves interpretation of what investors expect out of the upcoming elections. I'm still going with the my thoughts last week that the market cares less about the outcome and more about knowing in advance what the outcome will be. There are advantages and disadvantages to any outcome but as long as its seen ahead of time and the market isn't too surprised, investors will feel comfortable with their money in stocks.

Momentum is also on the bulls' side and the latest stretch towards the previous highs sets the charts up for at least testing potential resistance with solid support below. Small caps (S-fund) did make new highs this week while outperforming large caps (C-fund) and foreign markets (I-fund). The market did not completely fall apart last month and that gives confidence back to the dip buyers. Earnings season is taking off and that will be the bears hope to cut the optimism. Tech companies have lagged the broad markets recently so putting real numbers to their performance as companies will determine how comfortable market participants feel about them going forward.

Bonds fell this week as investors dropped their cautious holdings to catch a ride on the FOMO train. This gave the F-fund a slight loss of 0.17% to lag the TSP funds. The S-fund led the funds with a gain of 5.48% for the week.




Here are the weekly, monthly, and annual TSP fund returns for the week ending October 9:




The SPY's (S&P 500 / C-fund) started the week with gains and continued following a late pull back Tuesday after the President's tweet about delaying stimulus until after the election. Momentum the last two days of the week pushed the index to levels not seen in more than a month. This included a gap up Friday to leave a second open gap on the chart. The trajectory of the market has been and continues to be a climb higher since the middle of September. The C-fund gained 3.89% for the week.




The Dow Completion Index (S-fund) continued to outperform large caps while the large tech companies driving large cap indices have lost the attention of investors. By mid-week the index had produced new all time highs surpassing levels that had sparked a sell of in early September. This is a good sign for those investing in large caps that the new highs are possible. The S-fund outperformed the TSP funds for the week with a gain of 5.48% for the week.




EFA (EAFE Index /I-fund) gapped up to start the week but filled that gap the next day to test the 20-day EMA. The index rallied the next three days and eventually traded above rising resistance of Friday. Gaps were left behind but the index is now just below its September highs. The I-fund was up 2.99% for the week.




The BND (Bonds / F-fund) traded between what was falling support the previous week. Investors moved out of bonds to jump back into the rising momentum of stocks. After trading around the 20 and 50-day EMA the index has now settled below both. The losses were not much but were a disappointment compared to the gains of stock indices. The F-fund fell 0.17% 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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