The bulls amplified their presence in the final week of August. All four TSP funds outside of the G-fund suffered losses for August, but those who bought into the selling earlier in the month were rewarded with a rally this week.
The greatest winners this week were those holding the S-fund. The small cap TSP fund has produced a six-day winning streak and has gained 4.75% over those six days and a 4.24% gain for this week alone.
The catalyst for the bulls' success has been economic data that has been weak enough for buyers to believe the Federal Reserve will not raise interest rates again this year, or for the foreseeable future. Inflation is taming, the economy is slowing without major fears of a recession, and the Fed is likely ending officially ending their rate hike campaign.
Now we wonder how long the optimism can last. How long can we celebrate a rising unemployment rate and other weakening economic figures?
The backbone of the U.S. economy has been the strength of the consumer. Their resilience through high inflation and rising borrowing cost has kept the U.S. economy safe from a recession so far. Signs of their exhaustion will be the beginning of real concern. But that is not a concern yet. Household spending accelerated in July from June.
The short-term outlook is the stock market has quickly become extended and momentum has slowed. The long weekend may have calmed the buying spree and profit taking may take place in waves. September's track record doesn't' exactly inspire confidence to hold blindly.
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Here are the weekly, monthly, and annual TSP fund returns for the week ending September 1.
The large-cap ETF SPY (C-fund) came into the week below its 50-day EMA and the C-fund was down 3.85% for August. Right away buyers showed some life and built off the gains of the previous Friday. Suddenly, the ETF was up for its fourth straight day coming into Thursday, but the winning streak was ended with some late selling near the closing bell. But buyers were not done. The ETF added a modest gain on Friday to end the week up 2.55%.
The highs of the week match up with the bottom an open gap from the beginning of August. We typically see open gaps filled, but they can be such a target for technical traders that they can become resistant like this weeks did.
The small-cap index DWCPF (S-fund) outshined large caps this week. The S-fund was up every day of this week which gives it a running six-day winning streak. Like SPY, DWCPF moved right through its 50-day EMA without any resistance. The equivalent open gap of the one mentioned in the SPY chart has not been reached yet for DWPCF. That may give investors reason to choose the S-fund over the C-fund with its momentum and room to move before the open gap is reached. However, some investors may be hesitant to hold the S-fund in fear of a correction after the quick spike.
The S-fund led the TSP funds with a gain of 4.24% for the week.
The I-fund lagged the TSP stock funds this week, but the ETF EFA (I-fund) still made technical progressions. Unlike the C and S-fund charts, the I-fund chart did close the week below its 50-day EMA after spending a single day above it this week. Buyers may be hesitant to hold when considering the open gap below the current price.
The I-fund ended the week with a gain of 1.98%.
The F-fund was up for the week but ended off its highs established mid-week. A 0.6% gain on Tuesday lifted the BND to its 50-day EMA, the price held for the next two days, but gave back 0.47% on Friday to reduce the week's gains to 0.48%.
The ETF may be headed back to test the open gap established in August.
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.
