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TSP Talk: A little panic hits The Street

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TommyIV filling in for Tom today. Thanks for reading.


Inflation concerns continue to drive investors to sell. Tuesday was more rotational selling but after the release of the Consumer Price Index numbers on Wednesday that selling became more broad and corrective in character. Consumer prices jumped higher this April from the previous April than by any other year length comparison since 2008. This report is validating the fears of the U.S. heading towards hyper inflation or rate hike from the Federal Reserve sooner than expected.

Growth tech stocks are vulnerable to inflation which threatens their expected earnings growth and NASDAQ lagged the large cap indices. Small caps (S-fund) lagged the TSP funds Wednesday after being the recovering intraday losses Tuesday. This week's sell-off has become more broad and the new concern is whether momentum will drive stocks down further or if technical support will attract new buyers to cheaper stocks.

Inflation concerns also take value out the fixed income of bonds and although to a lesser extent than stocks, bonds were down for the day as well.

Daily TSP Funds Return

The past data and the potential higher inflation drove stocks down today yet UUP the dollar index was up today. Not only was it up, UUP gapped up and closed at its high for the day. Something is brewing under the surface and its hard to make sense of it. The headlines are inflation reports have investors leaving stocks yet the dollar is up and inflation shelters like gold were down Wednesday as well.






The S&P 500 (C-fund) opened lower Wednesday and added up the losses until the closing bell. The key points of this chart is that the selling ended around the 50-day EMA which the index has not traded much below this year. This could be an entry point to those not spooked by the inflation reports. There is still an open gap produced Tuesday that will want to be filled as well.




The DWCPF (S-fund) has already been trading below its 50-day EMA and its fell deeper below it Wednesday. We had this sort of weekly sell off in this index in March and the index rebounded to its highs in late April. The index is still up for the year and the momentum over the last year is up. Its move forward may decide its direction for months to come. More than a 3% loss in a single day is concerning.




The EFA (I-fund) slipped Wednesday but its 50-day EMA held as support and kept it within about a month long trading channel. Wednesday losses were not ideal but the technical set up for the index may put investors at more ease than the other TSP funds.




The Transportation Index solidified its break below its extended rising trading channel. May gains were given up Wednesday and the old support may be tested and resistance if the index rebounds today.




Gold slipped Wednesday with the dollar up. Inflation concerns meant nothing for the asset that is thought to be a hedge against inflation.




The Volatility Index jumped to March levels Wednesday. A spike that may suggest more volatility in the near future until the markets can make sense of what the future holds for interest rates.




BND (F-fund) slipped with stocks Wednesday. The spike in the consumer price index shed value off the fixed income from bonds. The index gapped down for the second day and was just off its lows for the close. This week has erased the most of the slow grind bond prices have been adding in the last month and a half. An open gap from early April is just below current prices.




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

Thomas Crowley (TommyIV)


Posted daily at www.tsptalk.com/comments.php

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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