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TommyIV's TSP Talk Blog

TSP Talk Weekly Wrap Up

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Momentum, a strong jobs report, and a dovish Fed propelled the C and S-funds to new highs day after day. The C-fund was up everyday this week while the S-fund only had one day of modest losses. Momentum and positioning ahead of the FOMC meeting got stock indices rolling this week. The actual news out of the FOMC press conference was expected and the tone for future rate hikes was dovish. The Fed will start cutting it bond buying program by $15 billion a month at which rate would wipe out the program by mid-2022. However they are open to change that rate depending on economic conditions.

The non-farm payroll jobs report came out and was greater than expected. The economy added 531,000 jobs and the unemployment dropped to 4.6% from 4.8%. This was a plus for a job market that has struggled to improve to the needs of consumer demands. The job market is also a closely monitored data set the Federal Reserve watches to make monetary policy changes. The better than expected jobs report ensured a cut to bond purchases this month.

The Federal Reserve has doing a good job balancing a dovish tone with the acceptance of tightening monetary stimulus to combat inflation. The leadership role of Jerome Powell has a questionable future. The Federal Reserve Chairman position is up for selection in February and my guess is markets don't want the surprise of a new face of the Federal Reserve while some Democrats would like to see someone else take over especially in light of the trading scandal among Fed members under Powell's watch.

It is easily arguable that indices are over extend and in need of a break. But of course that argument was valid going into this week. The trend has been strong and those who haven't followed it have been banging their heads on the sidelines. Typically the more extended and distant from intrinsic value the market grows, the greater the correction. Having only two IFTs to work with and only a closing price to buy and purchase puts TSP investors at greater risk to a sharp pull back. The common advice given in retrospect to such event is to not panic sell but rather protect yourself ahead of time with a risk tolerance your current investing style allows.

Looking for an edge on your TSP return? Get the Last Look Report for as low as $4.19 / month. The report is a daily email on the TSP AutoTracker moves, news, forum threads, and more before the IFT deadline. The service is aimed to help you make your own IFT decisions by giving you relative information 30 min prior to the deadline including where the members of TSP Talk are moving their money.

Here are the weekly, monthly, and annual TSP fund returns for the week ending November 5:

The trend remain up and steep for SPY (S&P 500 / C-fund). The index rode the trend line from the bottom of the rally to Friday's close very closely. The climb has become impressive and the index added gains every day this week. There is a resistance line that the index will face if the trend continues into next week. The C-fund was up 2.03% yet lagged the small cap S-fund.

The Dow Completion Index (S-fund) broke through resistance this week after pulling back late the previous week. This is out of character for the usually clock work oscillations this index has been through in the previous months. The S-fund led the TSP funds with a 3.41% gain for the week.

EFA (EAFE Index / I-fund) remained in the rising trading channel that had formed through the second half of October. This index is not making new highs but is not far off from its highs. Not uncommon, the index has two open gaps below. The I-fund lagged the TSP stock funds with a gain 1.64%.

BND (Bonds / F-fund) had been in a tight trading range in not so favorable technical conditions; however the index broke through the 50 and 200-day EMAs Thursday and continued higher onto Friday to get back to mid-September prices. The F-fund was up 0.63% 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
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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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DWCPF (S Fund) (delayed)

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EFA (I Fund) (delayed)

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BND (F Fund) (delayed)

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