Weekly TSP Wrap-up from TSP Talk
Testing the Low end of the range
The week started out on sour note, but on Wednesday and Thursday the market put together its first two-day rally in over a month. That rally was apparently just the cheese put out to catch investors off guard as Friday saw the downside continue after a weaker than expected employment report.
Friday’s losses took the TSP stock funds into the red for the week. The C-fund lost another 2.22%, the S-fund dropped 3.4%, and the I-fund fell 2.73%. Bonds (F-fund) were up 0.51% as investors again opted for safety, and the G-fund added 0.03%.
For the year, both the C-fund and the I-fund remain in negative territory. The C-fund is now down 3.68%, the I-fund has given up almost 15%, while the S-fund is hanging onto a 2.94% gain. The F-fund is the top fund in 2010 with its gain of 4.30%. The G-fund is up 1.40%.
The S&P 500 could not break above the 200-day EMA (exponential moving average) again last week, and instead the weak jobs report helped pull the index back down to the lower end of that May 6th “shock day” trading range we have been watching. As we have been saying since May 6, this appears to be a good area to be a buyer, but the deterioration of the chart formation with its overhead resistance, makes it a tougher endeavor.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The potential for this bull market correction to turn into a new bear market is certainly real, and caution is warranted, but until the 50-day EMA (not shown, but currently 1133) crosses below the 200-day EMA (1101) the S&P 500 remains in a bull market “officially”, and in bull markets you buy the dips. Once we get the "golden cross", you become a seller of rallies.
Some investors are getting a jump on the potential change and are going into full defensive mode now – and capital preservation is never a completely bad idea in an environment such as this. But if this turns out to be just a typical 10% to 15% correction in a bull market, the investors and market timers who are taking the risks now, will be rewarded the most. It is a trade-off of risk vs. reward and each individual must decide how much risk they are willing to take. Some do not want to take risks, and more aggressive investors might want to roll the dice.
We want to see which will break first, the 200-day EMA or the May 6th low, and starting Monday morning the test is back on the May 6th low. If that 1070 level is broken, we should see that 50-day EMA get closer and closer to the 200-day EMA, and a bear market will begin. But until then, it’s risky, but there is a pretty good set up being created for at least a short-term bounce.
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
Testing the Low end of the range
The week started out on sour note, but on Wednesday and Thursday the market put together its first two-day rally in over a month. That rally was apparently just the cheese put out to catch investors off guard as Friday saw the downside continue after a weaker than expected employment report.
Friday’s losses took the TSP stock funds into the red for the week. The C-fund lost another 2.22%, the S-fund dropped 3.4%, and the I-fund fell 2.73%. Bonds (F-fund) were up 0.51% as investors again opted for safety, and the G-fund added 0.03%.
For the year, both the C-fund and the I-fund remain in negative territory. The C-fund is now down 3.68%, the I-fund has given up almost 15%, while the S-fund is hanging onto a 2.94% gain. The F-fund is the top fund in 2010 with its gain of 4.30%. The G-fund is up 1.40%.
The S&P 500 could not break above the 200-day EMA (exponential moving average) again last week, and instead the weak jobs report helped pull the index back down to the lower end of that May 6th “shock day” trading range we have been watching. As we have been saying since May 6, this appears to be a good area to be a buyer, but the deterioration of the chart formation with its overhead resistance, makes it a tougher endeavor.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The potential for this bull market correction to turn into a new bear market is certainly real, and caution is warranted, but until the 50-day EMA (not shown, but currently 1133) crosses below the 200-day EMA (1101) the S&P 500 remains in a bull market “officially”, and in bull markets you buy the dips. Once we get the "golden cross", you become a seller of rallies.
Some investors are getting a jump on the potential change and are going into full defensive mode now – and capital preservation is never a completely bad idea in an environment such as this. But if this turns out to be just a typical 10% to 15% correction in a bull market, the investors and market timers who are taking the risks now, will be rewarded the most. It is a trade-off of risk vs. reward and each individual must decide how much risk they are willing to take. Some do not want to take risks, and more aggressive investors might want to roll the dice.
We want to see which will break first, the 200-day EMA or the May 6th low, and starting Monday morning the test is back on the May 6th low. If that 1070 level is broken, we should see that 50-day EMA get closer and closer to the 200-day EMA, and a bear market will begin. But until then, it’s risky, but there is a pretty good set up being created for at least a short-term bounce.
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
