Weekly TSP Wrap-up from TSP Talk
Crash!
After months of concerns over the debt situation Greece, which was spreading through Europe, the market finally cried “Uncle” and sold off last week, highlighted by an historic trading day on Thursday.
No one yet knows what really happened on Thursday, but price pays and all we need to know for our TSP accounts is what happened to the share prices. If it was some kind of error that took the Dow down nearly 1000 in a matter of minutes, then you would have expected the market to rebound on Friday, but that did not happen. So we can make all the excuses we want. The bottom line is, stocks sold off, and the TSP stock funds fell.
For the week the TSP stock funds, losses were steep. The C-fund lost 6.34%, the S-fund dropped 8.61%, and the I-fund plummeted 9.41%. The F-fund gained 0.44% as investors opted for bonds. The G-fund was up 0.06%.
The losses nearly took all of the 2010 gains away from the C-fund as it is now only up 0.27% for the year. The S-fund is holding onto a 5.29% gain and the I-fund continues to struggle is now down 10.78% in 2010.
You can see in the chart that last week’s carnage evaporated much of the gains made since the February low in the S&P 500. While last week we talked about the index still trading above the 50-day EMA (exponential moving average), it has now clearly penetrated that mark and our bias has to switch from bullish, to more of a cautious outlook.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Of course the severity of the selling did not give traders a chance to act unless you were somehow savvy enough to see that Wednesday took out the 50-day EMA, prior to the Thursday crash. That is tough to do with our 12 noon ET interfund transfer deadline, as you would have had to make your decision by noon on Wednesday. Taking a look at our TSP Talk AutoTracker, which tracks our members’ TSP account transactions; we had several members actually do just that. Nice job! But there were other clues for us such as the volatility jumping over the last couple of weeks.
As we talked about last week, market tops are not usually in the shape of an upside down “V”. For all we know, we could see tests of the old highs on the S&P 500 in the coming weeks, but we could still be forming a top. Market timers could do well if played right as the swings could be very large.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
It is a different ballgame now that the S&P 500 is trading below the 50-day EMA. We have to think more defensively, although the market can rally strongly when it is oversold like it is. But it is probably best to err on the side of being overly cautious now, rather than overly aggressive.
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
Crash!
After months of concerns over the debt situation Greece, which was spreading through Europe, the market finally cried “Uncle” and sold off last week, highlighted by an historic trading day on Thursday.
No one yet knows what really happened on Thursday, but price pays and all we need to know for our TSP accounts is what happened to the share prices. If it was some kind of error that took the Dow down nearly 1000 in a matter of minutes, then you would have expected the market to rebound on Friday, but that did not happen. So we can make all the excuses we want. The bottom line is, stocks sold off, and the TSP stock funds fell.
For the week the TSP stock funds, losses were steep. The C-fund lost 6.34%, the S-fund dropped 8.61%, and the I-fund plummeted 9.41%. The F-fund gained 0.44% as investors opted for bonds. The G-fund was up 0.06%.
The losses nearly took all of the 2010 gains away from the C-fund as it is now only up 0.27% for the year. The S-fund is holding onto a 5.29% gain and the I-fund continues to struggle is now down 10.78% in 2010.
You can see in the chart that last week’s carnage evaporated much of the gains made since the February low in the S&P 500. While last week we talked about the index still trading above the 50-day EMA (exponential moving average), it has now clearly penetrated that mark and our bias has to switch from bullish, to more of a cautious outlook.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Of course the severity of the selling did not give traders a chance to act unless you were somehow savvy enough to see that Wednesday took out the 50-day EMA, prior to the Thursday crash. That is tough to do with our 12 noon ET interfund transfer deadline, as you would have had to make your decision by noon on Wednesday. Taking a look at our TSP Talk AutoTracker, which tracks our members’ TSP account transactions; we had several members actually do just that. Nice job! But there were other clues for us such as the volatility jumping over the last couple of weeks.
As we talked about last week, market tops are not usually in the shape of an upside down “V”. For all we know, we could see tests of the old highs on the S&P 500 in the coming weeks, but we could still be forming a top. Market timers could do well if played right as the swings could be very large.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
It is a different ballgame now that the S&P 500 is trading below the 50-day EMA. We have to think more defensively, although the market can rally strongly when it is oversold like it is. But it is probably best to err on the side of being overly cautious now, rather than overly aggressive.
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
