The long weekend ended the bull's momentum. The previous week's best performer turned to this week's worst. The S-fund was down all four days of the shortened week and accumulated a loss of 2.5% for the week. There was little relief from losses among the TSP stock funds. Only the C-fund had a day of gains for the week and it was a modest 0.15% gain on Friday. The S and I-funds recorded a loss everyday of the four day week.
The main fear across the stock market is inflation returning and high interest rates persisting. Bond yields rose again this week while economic data remains resilient. Investors worry about a spike in inflation that could reignite the Fed's desire to raise borrowing costs. It seems counterintuitive for investors to not want strong economic data, but they are hoping for high inflation to end without a recession and they believe that requires the economy to slow just enough to tame inflation. If economic activity fuels inflation, more aggressive measures to tame it may ignite a deeper recession.
At the same time some of the indices' top weighted tech companies suffered losses this week after China added restrictions to Apple products. The pull-back in the tech sector has also cooled the exuberance in the A.I. sector. Investors are thinking twice about the economic success A.I. has been projected to have.
This market action may be ideal for swing traders, but TSP investors may struggle to decide when to pull the trigger for entry and exit opportunities. Only having two IFTs per month to work with comes at the cost of making the decision to use one seem colossal. But that comes with the advantage of keeping your investment approach simple. If you are having trouble with balancing these two, check out TSP Talk's Last Look Report. The report is a tool for you to help you make those final IFT decisions. Learn more about the report here where you can sign up for a free week of reports.
Heading into the new week we wonder if the market can turn around just as easily as it did on Tuesday. Some may have already bought into this week's weakness, but other may want to see some strength develop before they get back in.
Below we look at the different technical situations in which each the TSP funds find themselves. They all carry similar technical situations but are at different stages of each.
Here are the weekly, monthly, and annual TSP fund returns for the week ending September 8:
Last week SPY reached its intraday high for the week at the bottom of the open gap left open from early August. We typically expect open gaps to be filled, but the quick run to reach it left the ETF and the C-fund quickly overbought. The pullback imitated from the bottom of that open gap bled over into this week. SPY started its week lower and was down three of the four days. That one day of gains provided just 0.15% in relief.
The trend turned this week but dip buyers may have been keen on the 50-day EMA holding as support on Thursday. This back and forth action is ideal for swing traders who are able to stick to their plans. The C-fund ended the week down 1.26% in the shortened week.
The S-fund fell harder than the C-fund this week and did not find support in its 50-day EMA. The S-fund recorded a loss in each of the four trading days this week which accumulated to a 2.53% loss; the worst return among the TSP funds for the week. The DWCPF 50-day EMA did not hold as support and the index closed the week below it. That is not too surprising considering the effortless crossings of the 50-day EMA in the last couple of months.
The 200-day EMA is within reach but would take another stretch of losses to get there. Some may want to see that 200-day EMA hold as support before increasing their S-fund holdings.
EFA (I-fund) started the week below its 50-day EMA so its 200-day EMA is a more reasonable target for dip buyers. The I-fund fell slightly more than the C-fund for the week and in the process closed a smaller open gap from late August. The I-fund fell 1.40% for the week.
BND's sell-off on Friday carried momentum over the weekend. The rising trend was broken and the ETF seemed bound to fill the open gap below. But again, instead of an open gap being filled, it triggered a change in direction. The gap was left open and the F-fund put together a couple days of gains to end the week.
The F-fund ultimately fell 0.30% for the week.
Good luck and thanks for reading! We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at TSP Talk - Market Commentary. If you need some help deciding what to do with your account, perhaps one of our premium services can help.
Thomas Crowley
(TommyIV)
www.tsptalk.com
Weekly Wrap-Ups Archive
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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.
