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TSP Talk Weekly Wrap Up - AI Saved the C-fund

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A rally in tech stocks and optimism for a debt-ceiling deal over the weekend saved U.S. stocks from weekly losses. The S&P 500 spent most of the week in negative territory after a flat Monday and nearly 2% in losses over the next two days. The early losses were a product of debt-ceiling anxiety. The June 1st deadline set by Treasury Secretary Janet Yellen comes next week and there is still no deal made on raising the debt-ceiling.

The worst case scenario is a default on debt by the Treasury, but there are still lesser consequences to be suffered. Yields are already rising putting more pressure on the economy and banks holding these long-term assets that are losing value; a problem that caused the bank failures earlier this year. The risky behavior of the government to play chicken with the debt-ceiling in and of itself is a threat to the credibility of U.S. debt. If not in this instance, it will eventually be taken too far. Another threat to the market is a short-term solution that allows these political dramatics to be dragged through the summer.

Large cap indices and the C-fund were saved from the debt-ceiling woes on Thursday when the chip maker NVIDIA released outstanding report on sales which sparked strong gains for any stock associated with artificial intelligence. That included some big tech names that carry a lot of weight in the S&P 500. So while the broader market was still suffering, these tech names lifted tech heavy indices with them.

The rest of the market joined the rally Friday when the under invested wanted in on the fresh gains. A sense of optimism of a debt-ceiling deal being made over the weekend brought in more investors looking to be positioned in front of a relief rally following the long weekend. That of course could back fire if a deal is not made or if a deal sparks a sell-the-news cascade of profit taking. The S&P 500 (C-fund) is at its highs for the year, a year that has not been easy to navigate, many investors will want to protect capitol with the dog days of the summer ahead.

The C and S-fund squeezed out modest gains under 0.5% for the week. The I-fund joined the stock rally Friday but still fell nearly 2% for the week. The F-fund is falling as yields rise in anticipation of the June 1 debt-ceiling deadline, the F-fund fell 0.6%.


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Here are the weekly, monthly, and annual TSP fund returns for the week ending May 26:




Below are the three-month charts of the congruent index or ETF of the three TSP stock funds (C, S, and I) and the TSP bond fund (F). Each are in unique technical situations than the others. The C-fund is making new highs for the year, the S-fund is trapped in trading range that is closer to its lows of the year rather than its highs, the I-fund has fallen from a trading range that had kept it near its 2023 highs, and the F-fund is in a free fall heading for an open gap left behind from March.


The C-fund had a difficult start to the week. After reaching new highs the previous Thursday, the C-fund was down -1.82% in the first three trading days of this week. The SPY chart shows the price trading near its 50-day Exponential Moving Average (EMA) Wednesday, but the ETF never did reach the moving average price. Earnings from the chip maker NVIDIA sparked a rally in tech stocks that started Thursday which helped lift the C-fund 2.2% over a two-day stretch. The bounce back Thursday and Friday gave the C-fund a 0.34% gain for the week to establish a new high for 2023 on Friday and lead the TSP fund returns for the week.




The S-fund had a similar weekly gain, but its path was different. The S-fund was 1.1% to start the week on Monday. Then the S-fund fell over the next three days including Thursday while the C-fund was starting its late week rally. Small caps joined the rally on Friday with optimism going into the long weekend adding 1.47% on the final day of the week. The net return was a 0.30% gain.




The I-fund led the TSP funds in yearly returns coming into the week, but fell for the first four days. Those four days accumulated a 2.9% loss for the I-fund. The I-fund bounced back with nearly a 1% gain of Friday, although the fund still lagged the C and S-fund on the day. The net return for the week was a loss of 1.98% to under perform the other TSP funds for the week and losing its title of best 2023 return to the C-fund.





The F-fund has been in decline with bond yields rising as the deadline for the debt-ceiling gets closer without resolution on negotiations. The F-fund fell further below its 200-day EMA it slipped under in the previous week's action. The next technical target is an open gap left behind in early March. The ETF BND actually found support at the top of that open gap on Friday. We'll see if that support can hold the momentum into next week. The F-fund was down 0.57% 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.

I personally provide the Last Look Report. The report is a daily email on the TSP Talk AutoTracker moves, economic news, forum threads, and more before the IFT deadline. The service is aimed to give you daily insight to help you make your own IFT decisions. Emails are sent everyday weekday 30 minutes prior to the TSP trade deadline.


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 05-28-2023 at 02:08 PM by TommyIV

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TSP Talk Weekly Wrap Ups

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S&P500 (C Fund) (delayed)

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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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Yahoo Finance Realtime TSP Fund Tracking Index Quotes