TommyIV's TSP Talk Blog

We had another week split in two by direction. Like the previous week the first half carried the weight of inflation fears and a little carry over of the sell off in cryptocurrencies. The greatest slip came at Wednesday ahead of the release of the Fed minutes. The highlights of the Fed minutes were its focus on watching inflation while thinking about slowing down its bond buying program. These minutes are from the previous meeting so more data has come since then but there seems to be a sense that the Fed believes the recent pick up in inflation is temporary.

Stock indices started their comeback Thursday after jobless claims fell to a new low for the pandemic era. Stocks stayed afloat Friday but large caps did slip a bit to keep the C-fund in negative territory for the week. A modest gain in small caps kept the S-fund in positive territory for the week. The was more economic data Friday of record manufacturing activity last month.

The markets is directionless at the moment while the economy is recovering. The issue is if economy turns too hot it threatens to accelerate inflation and enticing markets into unhealthy bubble conditions. The next move for the market is hard to predict but that is especially the case currently. So far there have been buyers to take indices out of holes and keep prices from sinking. How long can buyers endure?

The C-fund took the only loss for the week down 0.39%. The F-fund had a slight gain and the I-fund led the TSP funds with a 1.05% gain for the week.





Here are the weekly, monthly, and annual TSP fund returns for the week ending May 21:




The SPY (S&P 500 / C-fund) slipped back below the rising trading channel of April into early May. Similar to the previous week, the index fell to test its 50-day EMA which it did trade below intra-day Wednesday but again began its rebound off its lows from there. The index ended the week still below a trend line but above its 20-day EMA not far from the closing price of the previous week. The C-fund was down 0.39% for the week.




The Dow Completion Index (S-fund) slipped mid-week as well but was able to rebound into positive territory for the week. The index was unable to maintain the highs of Friday's action but still with a slight gain just below the 20 and 50-day EMAs. The index now sits in the top part of a bear flag. The S-fund was up 0.33% for the week but lags large caps for the month.





EFA (EAFE Index / I-fund) remain off their highs but remain in a rising trading channel off the support of its 50-day EMA. Gaps were filled this week and the index was able to produce a 1.05% gain to outperform the other TSP funds.




BND (Bonds / F-fund) followed the direction of stocks again coming off lows Wednesday to get a slight gain for the week. An open gap was filled Friday and the index closed just below its 50-day EMA while above its 20-day EMA which has held as support in April trading. There is still some obstacles for this index but like stocks, bonds are vulnerable to path of inflation not just stock pattern. A slow down in inflation would carry this index higher. The F-fund gained 0.08% 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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