TSP Talk Blog

Stocks were mixed on Friday, as has been the theme of late. The Dow gained a solid 87-points. the S&P was flat, the Nasdaq was down sharply, and the small caps and I-fund were on opposite ends of the spectrum, one down, one up. Some S&P sector rebalancing and a quadruple witching day with many options and futures contracts expiring, triggered a very high volume trading day.

Daily TSP Funds Return More returns

Last week started out with a stiff sell-off but the dip buyers were close at hand and pushed the indices right back up. The week ended with the large caps continuing to do well while small caps lagged. Normally when stocks are up we see varying degrees of positive returns in the TSP stock funds but lately the spread between the C, S, and I-fund has been dramatic. If you were in the I-fund you are celebrating a big week for your account. If you went with small caps you ended up with a little dent in your balance. And the large caps in the C-fund posted a solid week, but dwarfed were comparison to those international stocks.



Now more than ever we can't just decide if we are bullish or bearish on stocks in general. The diverse actions and returns make it so we have to decide which funds we are bullish or bearish on - either that or do more diversifying between the three.

The late weakness on Friday could have some negative impact on the early trading on Monday, but it may have also had something to with the sector rebalancing and may not be a negative technically as the charts may indicates. Generally I like to look at charts over theories, but Friday was not typical because of the contract expirations and rebalancing. The futures did open moderately lower on Sunday night but that doesn't always translate into a negative open on Monday. We shall see.

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The S&P 500 / C-fund made a new high on Friday but could not quite hold onto that record high at the close, closing just below Thursday's closing high. There is a small open gap down near about 2912, but right now it is right in the middle of its rising trading channel so there is room on both sides as far as support and resistance goes. You can see the strange pop in volume, which hasn't happened since June's expiration Friday.




The small caps (S-fund) have been lagging but the chart looks interesting in that we have a bullish looking flag. It too is near the middle of its rising channel with 1470 looking like strong support if this pulls back anymore, but if the bull flag does what they are supposed to it will try to test the old highs before testing 1470. It's not a traditional looking bull flag so a breakout may not be a slam dunk.




The Nasdaq had a nasty negative reversal on Friday, possibly related to the rebalancing but either way, this one looks more like a bear flag than a bullish one.




The EAFE Index (I-fund) has been taking advantage of the weakness in the dollar this month but actually on Friday the dollar was up and the overseas markets did even better than the EAFE Index would indicate.




The dollar appears to be breaking down as we see the neckline of the head and shoulders pattern broken last week. On Friday it rallied but the neckline held as resistance.




The AGG (bonds) was up on Friday but it remains in narrow descending channel after breaking down from the longer-term support line earlier this month.




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Thanks for reading. We'll see you back here tomorrow.

Tom Crowley


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