Crash! Then a Downgrade
After seeing a lot of selling heading towards the deadline of the debt ceilings negotiations last week, many investors were expecting a relief rally once a deal was done, or at least expected the market to stop falling. Instead, things got much worse as the weak economic data, and perhaps the benign plan to reduce debt, sent stocks reeling.
Now the S&P has downgraded our credit rating from AAA to AA+. Once again the market reacted before the news came out. The question is, has the downgrade been priced into our markets already after this past week's crash?
For the TSP, the C-fund was down 7.15% for the week, the S-fund plummeted 10.52%, and the I-fund fell 9.30%. Bonds (F-fund) gained 0.71%, and the G-fund was up 0.03%.
I have been trying to take some vacation time, so while I did not watch things as closely as I normally do, there was no hiding from the news out of Wall Street last week.
The charts have been technically destroyed, but like most crashes, we can expect some strong rallies in the short-term. They may not last long, but they will be there.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
During a similar situation back in in 2008 when the financial crisis and TARP were the main stories, stocks plummeted, but I remember the day we saw a nearly 1000-point rally in the Dow right in the middle of that mess.
My focus in the coming days will be on watching the emotional reactions of traders to try to determine if this correction is going to turn out to be something more serious. In other words, if we should buy the weakness, or look to sell into the inevitable rallies that will be coming?
Well, back to my vacation. I have a couple of more days left and I am going to try to enjoy it before the real fun begins on Monday morning.
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.
After seeing a lot of selling heading towards the deadline of the debt ceilings negotiations last week, many investors were expecting a relief rally once a deal was done, or at least expected the market to stop falling. Instead, things got much worse as the weak economic data, and perhaps the benign plan to reduce debt, sent stocks reeling.
Now the S&P has downgraded our credit rating from AAA to AA+. Once again the market reacted before the news came out. The question is, has the downgrade been priced into our markets already after this past week's crash?
For the TSP, the C-fund was down 7.15% for the week, the S-fund plummeted 10.52%, and the I-fund fell 9.30%. Bonds (F-fund) gained 0.71%, and the G-fund was up 0.03%.
I have been trying to take some vacation time, so while I did not watch things as closely as I normally do, there was no hiding from the news out of Wall Street last week.
The charts have been technically destroyed, but like most crashes, we can expect some strong rallies in the short-term. They may not last long, but they will be there.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
During a similar situation back in in 2008 when the financial crisis and TARP were the main stories, stocks plummeted, but I remember the day we saw a nearly 1000-point rally in the Dow right in the middle of that mess.
My focus in the coming days will be on watching the emotional reactions of traders to try to determine if this correction is going to turn out to be something more serious. In other words, if we should buy the weakness, or look to sell into the inevitable rallies that will be coming?
Well, back to my vacation. I have a couple of more days left and I am going to try to enjoy it before the real fun begins on Monday morning.
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.
