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TSP Talk Weekly Wrap Up

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Recent market weakness remained intact early in the week pulling stocks down but robust earnings sparked a two day rally to end the week distancing the indices from the recent lows. The bears have been in control since the beginning of September but the bulls displayed some dominance with two back to back rallies to turn weekly losses to around 2% gains. A gap up Thursday was sparked by strong bank earnings among others and the build up of gains attracted underinvested bulls suffering from the fear of missing out (FOMO). The feedback loop continued with another gap up Friday but the day had its own character. There was more profit taking seen Friday than Thursday primarily in small caps. Despite outperforming for the week, the S-fund did give back Friday's initial gains to end down 0.07% on the day. The question now is if this is a preview of what to expect in large caps next week. It will be the battle of FOMO vs. profits taking next week and the performance will take place while earnings season starts heating up.

A couple economic figures came out this week. The consumer price index was slightly higher than expectations. This data came out Wednesday and although it wasn't too surprising it continues to put pressure on the Federal Reserve to combat higher inflation. Retail sales numbers for September came out Friday and were higher than expected. This went against worries of the delta variant of Covid-19's effect on consumers as well as the end of enhanced unemployment benefits.

Bonds showed life this week after producing weekly losses for the previous four weeks. The F-fund was down Friday but had accumulated three days of gains mid-week. The price of the bond index is still facing technical resistance above.

Earnings reports will be the focus next week with a few tech names on the schedule including Netflix, Intel, and Tesla.

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Here are the weekly, monthly, and annual TSP fund returns for the week ending October 15:

The SPY (S&P 500 / C-fund) filled the open gap left behind the previous week on Monday. This put the index back below its 20-day EMA and little technical support. The C-fund hit its low of the week on Tuesday where it was down 0.93% for the first two days. Three straight gains to follow with two opening gaps up, the C-fund ended the week with a 1.83% gain and is well above its 20 and 50-day EMAs. Gaps are a target for price movement and the two day rally was losing steam Friday; profit taking may pull this index down if news events and earnings can't keep buyers enthused.

The Dow Completion Index (S-fund) saw that profit taking on Friday when the opening gap up was also the peak of the day and the index gave back all the gains. Despite Friday's underperformance the S-fund is still above its 50-day EMA and has a new foundation of support below. Again like the C-fund the open gaps below may be a target into next week unless new buyers keep the momentum higher on track. The S-fund outperformed the TSP funds with a 2.60% gain for the week.

EFA (EAFE Index / I-fund) also gapped up twice and ended above falling resistance on Friday. An open gap from September was filled but the new gap was left behind in the middle. Back above its 50-day EMA the I-fund gained 2.41% for the week.

BND (Bonds / F-fund) also produced gains with stocks this week. The index was up the three middle days of the week and even closed back above the 200-day EMA on Thursday. The index pulled back below its 200-day EMA on Friday but still produced 0.33% in gains for the week. Two open gaps from the previous week were closed but a new gap was opened on Wednesday.

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
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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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Updated 10-17-2021 at 11:47 AM by TommyIV

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