TommyIV's TSP Talk Blog

Stock prices slipped for the week but the action was erratic. There was no definite course for price moves this week and it was a late sell-off Thursday that pushed indices under water; but even that sell-off did not have a follow through Friday. Investors have been transfixed by long-term bond yields that carry a different weight for different investors. Some worry about it effects on the Fed's monetary policy who are looked to be responsible for keeping the market stable. Fed Chairmen Jerome Powell is upping his public statements to keep market participants from a panic but his do nothing approach doesn't satisfy everybody especially when high inflation is also a concern.

Another reason for stock investors to be distressed by higher yields in the bond market is their ever increasing attractiveness to new buyers or investors moving to safety as stock prices continue to grow past reasonable. Stock investors have been enjoying easy gains for a year but with that grows distrust in the markets ability to sustain this growth. The S&P 500 hit a new all time high Monday and again Wednesday only to end the week below the even. Those quick sell-off like late Thursday are growing more worrisome that they will turn into a real correction. With yields high you'd expect some investors to take the opportunity to protect gains.

There was a hiding place for TSP investors this week. While U.S. stocks and bonds sold off, the I-fund held onto some gains for the week (0.58%). The small caps driven S-fund took the deepest cut of 1.99% for the week.




Here are the weekly, monthly, and annual TSP fund returns for the week ending February 19:




The SPY (S&P 500 / C-fund) produced new highs this week and broke a rising trend line in the process. But it was a sell-off Thursday that drove prices back below the February highs and even traded below the 20-day EMA Friday. Near the highs is not a bad place to be but it comes with more room to fall. So far these sell off are short lived and bought up in a couple of days. We'll know early next week if this trend will continue. The C-fund was down 0.75% for the week.




The Dow Completion Index (S-fund) slid from its open Monday and remained below par for the week. The index closed below its 20-day EMA on the Thursday sell off and eventually ended the week even with the moving average. The index is still in better shape than after the first week of the month but the momentum is not in the bulls favor. The 50-day EMA is the next test of support if the index does not rebound and that moving average did not hold up earlier in the month. The S-fund lagged the TSP funds with a loss of 1.99%.




EFA (EAFE Index / I-fund) gave back gains from early in the week but unlike the U.S. indices it did not give up all the gains. The index rebounded off its 20-day EMA on Friday to end the week with a modest 0.58% gain. The index did break below a rising trading channel Friday but was still a technical win for the index.




BND (Bonds / F-fund) fell more this week as the Fed did not say the right thing to stabilize bond yields. The index remained in a falling trading channel that now puts resistance between the current price and the open gap above. The index does not necessarily need to stabilize but pressure for the Federal Reserve to intervene will add up if it doesn't soon. The F-fund was down 0.27% 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
Facebook | Twitter

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.