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TSP Talk Weekly Wrap Up

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Rotation out of small caps and into large cap growth names sent the TSP stock funds in opposite directions this week. The C-fund gained 1.3% this week while the S-fund shed nearly 2%. Large caps (C-fund) struggled to stay out of negative territory for most of the week after investors were spooked by Secretary of the Treasury (and former Federal Reserve Chair) Janet Yellen's comments concerning the need to raise rates to keep the economy from overheating. This was Tuesday and Yellen quickly took back her words the same day after stocks quickly sold off.

Rise in inflation has been in the spotlight for a while mostly because businesses, risky or not, have been able to borrow cheap money and want to keep it that way as long as possible. Tightening of monetary policy by the Federal Reserve to combat accelerating inflation rates would pull equity assets off their high chair. Well stock investors were in for a treat Friday when a jobs report underperformed remarkably from expectations and there was a rise in the unemployment rate. This report surely took pressure off of the Fed to actually do anything like they've been touting for some time. This sparked a relief rally Friday across the TSP stock funds.

The rotation out of small caps ended Friday but the question is if this is was an end or a hiatus. Smaller names will be putting out earnings reports next week and that may affect matters depending on whether investors are or not distracted by other headlines.

Bonds inched higher this week and the F-fund gained 0.12% for the week. This left the S-fund as the only fund in negative territory for the week.




Here are the weekly, monthly, and annual TSP fund returns for the week ending May 7:




The SPY (S&P 500 / C-fund) reached new highs Friday during the relief rally thanks to a disappointing jobs report; a seemingly twisted statement out of context. Investors are celebrating more of the same with less consequence of out of control inflation. The high of Friday's action was the top of a rising resistance from the two previous peaks produced in April. The C-fund ended the week with a gain of 1.3%.




The Dow Completion Index (S-fund) slipped for most of the week even gapping down Tuesday below its 20-day EMA then eventually below its 50-day EMA Thursday. The poor jobs report Friday sparked some life into the sold off small caps and the fund rose 1.32% just on Friday to erase some damage earlier in the week. Despite the relief rally Friday the S-fund still fell 1.94% for the week lagging the other TSP funds that were all in positive territory for the week.




EFA (EAFE Index / I-fund) was in negative territory Friday but rallied for the rest of the week into record territory. The index left an open gap after gapping up Wednesday and instead of pulling back to fill the gap, EFA broke through overhead resistance to trade at record prices on Friday. Friday was an exciting day for the market and it'll be tough to sustain the momentum if not preferable for further healthy growth. The I-fund outperformed the TSP funds for the week with a gain of 1.33% for the week.




BND (Bonds / F-fund) started its week above its 50-day EMA and remained their for the rest of the week. The index fell from its highs intraday Friday but was approaching the 200-day EMA it hasn't tested since February after falling below it. Bonds will have to sustain some momentum to test the moving average next week. The F-fund gained 0.12% 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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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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S&P500 (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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