TommyIV's TSP Talk Blog

Earnings and low volatility continued to do well for large cap stock indices this week. The S&P 500 (C-fund) produced its fourth straight week of gains and its 59th record close this year. Without the heavy weighted companies lifting large caps, small caps (S-fund) lagged this week ending the week flat and off its highs. The performance of small caps reflects the entire market a bit better than the large caps. Even the sectors of the S&P 500 were split in performance but the gains out of consumer discretionary, communication services, and information technology carried the index to new highs.

Obviously this was a big week for earnings and the general success keeps sentiment high. Even poor earnings from Amazon and Apple couldn't knock the bulls off their pedestal. So far, 82% of the S&P 500 reported earnings have beat their forecasts. That kind of success has enabled bulls to negate the damage under the surface: high inflation, supply chain issues, government debt, and the foreseeable end to the Federal Reserve's full throttle stimulus to the economy. One of the best arguments to keep buying stocks at their highs and in the face of the forementioned: There is nowhere to go outside the stock market for yields that can outpace inflation.

Next week we will get more earnings but the trillion dollar companies are out of the way. The main focus next week will likely be the FOMC meeting Tuesday and Wednesday where the Federal Reserve is expected to begin its bond purchase tapering that has been on the radar for month.

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Here are the weekly, monthly, and annual TSP fund returns for the week ending October 29:




The SPY (S&P 500 / C-fund) continued to climb higher after reaching new high the previous week thanks in part to strong earnings. Moderately low volatility has kept the index price in a relatively tight rising trading channel. There are open gaps below but the price action has hardly looked back. The C-fund had its fourth straight week of gains this week with a 1.35% gain. The C-fund was up 7.00% for October.




The Dow Completion Index (S-fund) started the week off well with new highs and opened above rising resistance Tuesday but that would be the beginning of the rotation out of small caps. The index closed just above the open gap from earlier in the month on Wednesday and that acted as a support. The weekly losses were regained Thursday and Friday for the S-fund to break even for the week. The S-fund was up 5.43% for October.




EFA (EAFE Index / I-fund) chopped around this week hovering over the open gap from the previous week. The index was holding 0.7% in gains for the week by the end of Thursday but a 0.79% loss on Friday pushed the fund down 0.09% for the week. The I-fund lagged the TSP stock funds in October with a gain of 2.46%.




BND (Bonds / F-fund) gained some momentum early in the week and closed back above its 200-day EMA on Wednesday. The index pulled back from the Wednesday high and was back below the 200-day EMA at Friday's close. The F-fund did gain 0.50% for the week which nearly wiped out the months early losses. The F-fund ended October down 0.04%.





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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