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TSP Talk Weekly Wrap Up - The Bulls Fumble

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Investors faced the Federal Open Markets Committee this week, and it was not pretty. The FOMC was expected to keep the Fed Fund rate steady in this meeting, but it also put out its latest rate projections for future rates. The FOMC did hold rates steady but surprised the market with projections to keep rates higher for longer and possibly another rate hike in one of the two meeting left in 2023.

Fed Chairman Jerome Powell took the stage following the press release and gave a more hawkish tone than investors appreciated. He reiterated the uncertainty the Fed holds to why their current rates are not slowing the economy enough to pull back inflation to their desired pace. His optimism for a 'soft landing' also shifted to a shrug of the shoulders, a wishful thought over a plausible outcome.

Investors quickly sold after being faced with higher rates for longer and even less certainty about economic projections. The C and S-funds fell more than 2.5% between Wednesday and Thursday. It was the third straight week of losses for the C and S-fund and has officially put their corresponding indices into downward trend.

The bears have a hold of the market now. It is not the bulls' time of year, but some may consider buying into these lower prices in the case of an oscillating recoil that would at least temporarily bring relief. Others may want to stay clear of the market in case the last three weeks of selling are the beginning of something much deeper. They will wait for the bulls to have control before rejoining the market.

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

SPY (C-fund) had spent the first half of September bouncing on and off its 50-day EMA. The intraday hold of the S&P 500 was broken during Tuesday's action, but the ETF snuck back above the moving average before the day's close. Then Federal Reserve Chairman Jerome Powell was unable to accommodate the market's dreams of an end to high rates and further rate hikes. SPY slipped right through the 50-day moving average and the C-fund sold off Wednesday and Thursday dropping 2.6% over the two days. It seemed like there would be a little relief on Friday, but the indices sold off late to push the weekly losses lower.

The C-fund fell 2.91% for the week.

The small cap index DWCPF (S-fund) fell more aggressively than large caps this week. The index already started its week below its 50-day EMA, but it had the 200-day EMA as a target for support and new buyers. The 200-day EMA did hold after for Wednesday's close, but the broader market sold off Thursday and the DWCPF fell and closed below its 200-day EMA for the first time since the first trading day of June.

A gap was left behind and there is another open gap from June that could be the target for traders. The S-fund lagged the TSP funds for the week with a loss of 3.68%. It has now fallen 5.62% through September.

The I-fund was a promising alternative to the C and S-fund this month. It showed resilience through September where the C and S-fund struggled. But it too was a victim to the late week sell-off sparked by the Federal Open Markets Committee. On Thursday the ETF broke below a large bear flag that could span to the high of July. This sent prices down to its 200-day EMA which has actually held as support so far. The I-fund may still be outperforming the C and S-funds, but it too took a deeper loss this week. The I-fund lost 1.96% for the week.

The bond ETF BND gapped down on Thursday following the FOMC meeting. This sell-off pushed the F-fund into negative territory for the year. In early summer BND struggled to move past its 200-day EMA. Now it has significantly distanced itself from the 200-day EMA and continues to trend down. The F-fund did snap back some on Friday with a 0.37% gain, but it was not enough to lift the F-fund back into positive territory for the year. The F-fund fell 0.50% for the week and sits with a 0.08% loss for 2023.

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 TSP Talk - Market Commentary. If you need some help deciding what to do with your account, perhaps one of our premium services can help.

Thomas Crowley
Weekly Wrap-Ups Archive
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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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S&P500 (C Fund) (delayed)

( Real-time)
DWCPF (S Fund) (delayed)

( Real-time)
EFA (I Fund) (delayed)

( Real-time)
BND (F Fund) (delayed)

( Real-time)

Yahoo Finance Realtime TSP Fund Tracking Index Quotes