Weekly TSP Wrap-up from TSP Talk
Fork in the road
It was another good week for stocks as the major indices added to their 2010 gains, and all of the TSP funds ended in positive territory.
The C-fund was up 1.07% for the week, while the S-fund gained another 1.75%, and the I-fund added 1.29%. The F-fund (bonds) and the G-fund were up 0.12% and 0.06% respectively.
March continues to be a strong month as we are seeing gains in the stock funds between 4.2% and 6.7%. For the year, only the I-fund remains in negative territory while the S-fund is well out ahead at +9.18% in 2010. This illustrates why it is so important to understand the differences in the funds, as far as which are performing better, and why.
For the S&P 500, we are at a bit of a fork in the road. We have been watching the chart of the S&P 500 from early 2007 for clues to what might happen next, as that chart is very similar to what we are seeing today.
The comparisons between the above chart prior to the “you are here” arrow and today’s chart below are undeniable, except for one very important point: Today’s chart has not yet broken out above the prior high. That is important, because many times old highs act as resistance rather than breaking out.
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Let’s take a look at another chart from 2007. It is from a little later in the year.
Charts provided courtesy of www.decisionpoint.com, analysis by TSP Talk
You can see that there was a similar “V” bottom that quickly ran up to test the prior high. It actually broke out for a few days, but quickly failed and pulled right back down toward the prior low. The significance of that move, other than the obvious weakness, is that the failed breakout point above happened to be the peak before the 2008 collapse in the stock market, so it was actually the perfect time to be a seller.
I would like to say that today’s technical picture is much stronger than what we saw at the peak of 2007, but unfortunately, although looking very good based on the moving averages, they are very similar. The key will be whether the breakout can occur, and also whether it will hold. Since many other leading indices have already broken out, I am leading toward a breakout for the S&P, but I don't want to dismiss the possibility of a double top.
We have some very important events scheduled on Tuesday of this coming week that could help determine which path we are about to take. Greece has a deadline on Tuesday to show the EU its plans on reducing their deficit, and that could determine whether or not they are going to be getting a bailout. No bailout could mean unstable market conditions across the globe.
Also on Tuesday is the Fed’s FOMC meeting where they will discuss interest rates and monetary policy. These meetings can be market movers.
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
--------------------------------------
TSP Talk does not guarantee the accuracy or completeness of this report, nor does TSPtalk.com assume any liability for any loss that may result from reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice and are for general information only.
The information contained on this website is for educational purposes only and not intended to be recommendations, and may not be published, broadcast, rewritten or otherwise distributed without prior written consent from TSPtalk.com. Full Disclaimer
Fork in the road
It was another good week for stocks as the major indices added to their 2010 gains, and all of the TSP funds ended in positive territory.
The C-fund was up 1.07% for the week, while the S-fund gained another 1.75%, and the I-fund added 1.29%. The F-fund (bonds) and the G-fund were up 0.12% and 0.06% respectively.
March continues to be a strong month as we are seeing gains in the stock funds between 4.2% and 6.7%. For the year, only the I-fund remains in negative territory while the S-fund is well out ahead at +9.18% in 2010. This illustrates why it is so important to understand the differences in the funds, as far as which are performing better, and why.
For the S&P 500, we are at a bit of a fork in the road. We have been watching the chart of the S&P 500 from early 2007 for clues to what might happen next, as that chart is very similar to what we are seeing today.
The comparisons between the above chart prior to the “you are here” arrow and today’s chart below are undeniable, except for one very important point: Today’s chart has not yet broken out above the prior high. That is important, because many times old highs act as resistance rather than breaking out.
Let’s take a look at another chart from 2007. It is from a little later in the year.
Charts provided courtesy of www.decisionpoint.com, analysis by TSP Talk
You can see that there was a similar “V” bottom that quickly ran up to test the prior high. It actually broke out for a few days, but quickly failed and pulled right back down toward the prior low. The significance of that move, other than the obvious weakness, is that the failed breakout point above happened to be the peak before the 2008 collapse in the stock market, so it was actually the perfect time to be a seller.
I would like to say that today’s technical picture is much stronger than what we saw at the peak of 2007, but unfortunately, although looking very good based on the moving averages, they are very similar. The key will be whether the breakout can occur, and also whether it will hold. Since many other leading indices have already broken out, I am leading toward a breakout for the S&P, but I don't want to dismiss the possibility of a double top.
We have some very important events scheduled on Tuesday of this coming week that could help determine which path we are about to take. Greece has a deadline on Tuesday to show the EU its plans on reducing their deficit, and that could determine whether or not they are going to be getting a bailout. No bailout could mean unstable market conditions across the globe.
Also on Tuesday is the Fed’s FOMC meeting where they will discuss interest rates and monetary policy. These meetings can be market movers.
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
--------------------------------------
TSP Talk does not guarantee the accuracy or completeness of this report, nor does TSPtalk.com assume any liability for any loss that may result from reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice and are for general information only.
The information contained on this website is for educational purposes only and not intended to be recommendations, and may not be published, broadcast, rewritten or otherwise distributed without prior written consent from TSPtalk.com. Full Disclaimer
