A shake up
The stock market seemed to be on autopilot heading into Friday, when a weaker than expected GDP report, and the chaos in Egypt shook things up a bit.
By the end of the week, the modest weekly gains were mostly gone as uncertainty leading into the weekend sent investors scurrying to take profits.
For the TSP, the C-fund lost 0.53% on the week, the S-fund held onto a 0.54% gain, and the I-fund slipped 0.22%. Bonds (F-fund) were up 0.40%, and the G-fund picked up 0.05%.
For the month, the C-fund is still up 1.59%, the S-fund has a 0.44% gain, and the I-fund is up 1.68%. Bonds (F-fund) are up 0.29% in January, and the G-fund has added 0.22%.
Things were moving along very well, but as we’ve talked about many times during this tight ascending rally, sometimes these kind of extended trends end in a “thud”, but the pullbacks, which can be sharp, are usually short-lived when the decline is news driven.
Chart provided courtesy of www.decisionpoint.com
The S&P 500 was certainly stretched and due for a pullback. When the market moves up relentlessly for an extended period of time, investors, while bullish, start looking for a reasons to take profits, and they got a couple on Friday.
We have shown this 2006-2007 chart of the S&P 500 on TSP Talk many times because the current rally that we have been in, reminded me of the rally back then. It took a market crash in China’s Shanghai index back in February of 2007 to scare investors, similar to what we saw on Friday.
Chart provided courtesy of www.decisionpoint.com
The decline was sharp, but you can see that the rally resumes fairly quickly reminding us that in general, we want to be buyers of dips in a bull market. If this turns into something more sinister, the charts will let us know, but until then I see this pullback as a buying opportunity.
I don’t know if Monday is the day to buy, or if the pullback will take a couple of weeks to complete. That’s the problem. Those in the stocks might want to sell and wait on the sidelines to see how this develops. In 2007 it took two weeks to bottom. There’s always a chance that this is just a very short one or two day pullback, but when the market is this stretched, folks don’t always jump right back in so I can see this pullback playing out for at least a few days or more.
A quick look at the yield on the 10-year T-Note and we can see that it is still consolidating. This has gone on for quite a while now and when it breaks, either up or down, it will likely be a sharp move.
Chart provided courtesy of www.decisionpoint.com
The F-fund will move in the opposite direction of the break so if you have any interest in playing the F-fund, keep an eye on this chart. If the break is up, the F-fund will suffer going forward. If the chart breaks down, the F-fund will rise.
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 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.
The stock market seemed to be on autopilot heading into Friday, when a weaker than expected GDP report, and the chaos in Egypt shook things up a bit.
By the end of the week, the modest weekly gains were mostly gone as uncertainty leading into the weekend sent investors scurrying to take profits.
For the TSP, the C-fund lost 0.53% on the week, the S-fund held onto a 0.54% gain, and the I-fund slipped 0.22%. Bonds (F-fund) were up 0.40%, and the G-fund picked up 0.05%.
For the month, the C-fund is still up 1.59%, the S-fund has a 0.44% gain, and the I-fund is up 1.68%. Bonds (F-fund) are up 0.29% in January, and the G-fund has added 0.22%.
Things were moving along very well, but as we’ve talked about many times during this tight ascending rally, sometimes these kind of extended trends end in a “thud”, but the pullbacks, which can be sharp, are usually short-lived when the decline is news driven.
Chart provided courtesy of www.decisionpoint.com
The S&P 500 was certainly stretched and due for a pullback. When the market moves up relentlessly for an extended period of time, investors, while bullish, start looking for a reasons to take profits, and they got a couple on Friday.
We have shown this 2006-2007 chart of the S&P 500 on TSP Talk many times because the current rally that we have been in, reminded me of the rally back then. It took a market crash in China’s Shanghai index back in February of 2007 to scare investors, similar to what we saw on Friday.
Chart provided courtesy of www.decisionpoint.com
The decline was sharp, but you can see that the rally resumes fairly quickly reminding us that in general, we want to be buyers of dips in a bull market. If this turns into something more sinister, the charts will let us know, but until then I see this pullback as a buying opportunity.
I don’t know if Monday is the day to buy, or if the pullback will take a couple of weeks to complete. That’s the problem. Those in the stocks might want to sell and wait on the sidelines to see how this develops. In 2007 it took two weeks to bottom. There’s always a chance that this is just a very short one or two day pullback, but when the market is this stretched, folks don’t always jump right back in so I can see this pullback playing out for at least a few days or more.
A quick look at the yield on the 10-year T-Note and we can see that it is still consolidating. This has gone on for quite a while now and when it breaks, either up or down, it will likely be a sharp move.
Chart provided courtesy of www.decisionpoint.com
The F-fund will move in the opposite direction of the break so if you have any interest in playing the F-fund, keep an eye on this chart. If the break is up, the F-fund will suffer going forward. If the chart breaks down, the F-fund will rise.
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 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.
