Exhale
The stock market took a little breather last week and we can’t say it didn’t deserve one. We saw some “sell the news” reactions to fairly good earnings reports, but since stocks had run up so much into earnings season, this kind of profit taking is not surprising.
The effect on the TSP funds varied quite a bit during the week. The C-fund fell a modest 0.75%, while the S-fund saw a little more damage in losing 3.09%. The I-fund held its ground adding 0.02% as the dollar finally picked a direction – breaking down from its recent sideways trading channel. A weaker dollar will benefit the I-fund.
The F-fund lost 0.24% on the week as yields moved higher, and the G-fund picked up 0.06%.
We are seeing some cracks in the chart of the S&P 500, which is a minor warning sign for us, but there has not been any major damage done yet. The 2-day pullback found support at the 20-day EMA, which is good, but Friday’s early follow-through ran out of steam and the index couldn’t quite stay within that narrow rising trading channel (red lines).
Chart provided courtesy of www.decisionpoint.com
The dollar broke below its recent trading range, and this is what helped the I-fund stay in positive territory. As we have said many times, if the dollar is in a down trend, the I-fund will usually outperform the C and S fund. If the dollar is rising, the C and/or S funds are the better options.
Chart provided courtesy of www.decisionpoint.com
So, I am looking for some kind of pullback within the next few weeks, perhaps a "sell the news" reaction following earnings season, which began last week.
Chart provided courtesy of www.decisionpoint.com
If bonds are moving down then stocks become more attractive to investors. If stocks decide to take a break then perhaps we will see the bond yields move back down to the lower end of the bull flag (red arrow above) before breaking out. That would lead to a short term pop for bonds, and a short-term drop for stocks. Should the bonds yields breakout without testing the lower end of the flag first, I would anticipate seeing stocks not pulling back much. Of course stocks and bond prices don’t always move in opposite directions, as we saw them both move down last week, but in general, they do.
Good luck, and thanks for reading. We will be back here next week with another TSP Wrap Up.
Tom Crowley
www.tsptalk.com
Weekly Wrap-Ups Archive
The stock market took a little breather last week and we can’t say it didn’t deserve one. We saw some “sell the news” reactions to fairly good earnings reports, but since stocks had run up so much into earnings season, this kind of profit taking is not surprising.
The effect on the TSP funds varied quite a bit during the week. The C-fund fell a modest 0.75%, while the S-fund saw a little more damage in losing 3.09%. The I-fund held its ground adding 0.02% as the dollar finally picked a direction – breaking down from its recent sideways trading channel. A weaker dollar will benefit the I-fund.
The F-fund lost 0.24% on the week as yields moved higher, and the G-fund picked up 0.06%.
We are seeing some cracks in the chart of the S&P 500, which is a minor warning sign for us, but there has not been any major damage done yet. The 2-day pullback found support at the 20-day EMA, which is good, but Friday’s early follow-through ran out of steam and the index couldn’t quite stay within that narrow rising trading channel (red lines).
Chart provided courtesy of www.decisionpoint.com
The dollar broke below its recent trading range, and this is what helped the I-fund stay in positive territory. As we have said many times, if the dollar is in a down trend, the I-fund will usually outperform the C and S fund. If the dollar is rising, the C and/or S funds are the better options.
Chart provided courtesy of www.decisionpoint.com
So, I am looking for some kind of pullback within the next few weeks, perhaps a "sell the news" reaction following earnings season, which began last week.
Chart provided courtesy of www.decisionpoint.com
If bonds are moving down then stocks become more attractive to investors. If stocks decide to take a break then perhaps we will see the bond yields move back down to the lower end of the bull flag (red arrow above) before breaking out. That would lead to a short term pop for bonds, and a short-term drop for stocks. Should the bonds yields breakout without testing the lower end of the flag first, I would anticipate seeing stocks not pulling back much. Of course stocks and bond prices don’t always move in opposite directions, as we saw them both move down last week, but in general, they do.
Good luck, and thanks for reading. We will be back here next week with another TSP Wrap Up.
Tom Crowley
www.tsptalk.com
Weekly Wrap-Ups Archive
