TommyIV's TSP Talk Blog

An opportunity or a warning sign? Halfway through this last week, stocks looked to be maintaining a decent comeback from the losses of the recent weeks. That ended Thursday after Federal Reserve Chairman Jerome Powell spoke of a fair likelihood the FOMC would raise rates by a half point in the upcoming FOMC meeting. This suggestion coming from the Chairman made it a too real of a possibility for investors. Selling ensued following the comments and pursued through Thursday and Friday. This instant change in character by investors eliminates the idea that the Federal Reserve's campaign to raise borrowing costs is already priced into this market.

After Wednesday's close, both the C and the S-funds were up more than 1% for the week with the C-fund leading with a 1.53% gain. The indices were looking like solid support was establishing on the charts. But the sell-off over the last two days of the week, sparked by Jerome Powell's comments, produced a decline of -4.20% in the C-fund and -5.10% in the S-fund from Wednesday's close to the Friday's close. A little more unsettling was how uninterrupted the selling remained from Thursday to Friday. Dip buyers were non-existent, and the C and S-fund prices fell to levels not seen in over a month, erasing weeks of gains.

The question now is whether this was an entry point or a sign that we are deep rooted in a bear market. Its growing dangerous to buy and hold in this environment yet high inflation increases the necessity to for investors to find returns somewhere to combat declining purchasing power of their cash. Currently holding the G-fund (cash) is essentially accepting a decline in purchasing power, but as interest rates start to rise the G-fund's return will attempt to compensate with a higher return.

That FOMC meeting that this week was focused on is less than two weeks away. Until then more earnings may help (or hurt) the indices in the meantime. Economic data will again be heavily in the spotlight. The April jobs report will not be released until after the FOMC meeting.

The S-fund lagged the TSP funds this week with a 3.98% loss. The F-fund was down 0.94%.

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Here are the weekly, monthly, and annual TSP fund returns for the week ending April 22:




SPY (S&P 500 / C-fund) spent the first half of the week climbing out of a declining trading channel and rising back above its 20 and 50-day EMAs. Thursday the selling brought the ETF back to its 200-day EMA that had held as a bottom for the previous week. It did not hold this week. The price opened below the 200-day EMA and continued to fall down to prices not seen since mid-March. The C-fund ended the week down 2.74% after losing 4.20% after Wednesday.




The Dow Completion Index (S-fund) filled two gaps this week, one on its climb early in the week, and the second at the lows of its sell-off late in the week. The next price of significance is 1800 where the lows of February and March were established. The S-fund fell 5.1% on the sell-off following Wednesday. That gave the S-fund a weekly loss of 3.98%.




EFA (EAFE Index / I-fund) was down this week but to a lesser extent than the U.S. stock funds. The ETF remained within a falling trading channel as well as partially filled an open gap left open from March. The I-fund fell 2.09% for the week.





BND (Bonds / F-fund) is performing more of the same way. The losses are consistent as the Federal Reserve begin to rise borrowing costs which are pushing up yields and dropping bond prices. This week the F-fund fell deeper than the previous week and ended the week down 0.94%.




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.