Market Action
The holiday week did not add fuel to the late June rally but provided an entry point for those who missed it. We witnessed many TSP investors quickly use up their first July IFT to get into stock funds this week on the Last Look Report, but many of them were a day or two too early. Stock action was relatively light hearted in the days surrounding the 4th of July holiday. The TSP stock funds were already down for the week heading into Thursday, but the damage was amplified when the private data company ADP released its own jobs report that was too hot for the bulls to handle. The indices opened down and continued to fall heading into the TSP trade deadline.
This may have been painful for those already holding stocks, but spelled opportunity for swing traders with cash at hand. The Bureau of Labor Statistics released a non-farm payroll report more modest than ADP's on Friday and those who bought the dip on Thursday were patting themselves on the back at the TSP trade deadline with stocks up and in the process of filling those open gaps created on Thursday. But TSP investors have the burden of buying and selling just the closing price. Those open gaps were filled intraday in the S&P 500 (C-fund) and DWCFP (S-fund) and day traders were quick to sell the quick profit.
The C-fund ended up with a loss of 0.27% on Friday. The S and I-fund managed to keep some of Friday's gains.
All the TSP funds outside of the G-fund were down for the week. The I-fund took the greatest loss with its 2.2% decline. The S-fund was down 0.89% for the week but held the best opportunity for gains this week. See the chart below.
Looking Ahead
There is still a lot of faith in this market among TSP Talk members. But this week's action should be taken as a warning that the bulls do not have full control of this market and there are risks. But there are also opportunities to maximize your TSP. Finding those opportunities can be the hard part. We are given just two chances a month to make investment adjustments. Every day we take a look at the market for potential opportunities on the Last Look Report. We follow some of the best TSP investors trading decisions as they make them and community trends across the hundreds of TSP Talk AutoTracker members. Send me a private message on the TSP Talk Forum if you would like to get a free trial of the Last Look Report. If you are not a TSP Talk Forum member, do yourself a favor and sign up here: Register at TSP Talk Forums.
Next week the latest Consumer Price Index will be released. At this point, the market is nearly certain the Federal Reserve will raise the Fed rate again in the July FOMC meeting. Tuesday's CPI report will provide a catalyst for investors to speculate deeper.
Here are the weekly, monthly, and annual TSP fund returns for the week ending July 7:
The SPY (C-fund) started the week with an open gap to fill from the rally of the previous Friday. In retrospect we can see that the market gave investors two days to exit large caps before that gap was filled. But not only was that gap filled but another was opened on Thursday's sell-off. The opportunity for a quick return off the open gap in SPY (C-fund) was exclusive to day traders. The gap was filled intraday Friday and the ETF gave up its gains and slipped into negative territory in the second half of Friday's action. The C-fund ended the week with a loss of 1.12%.
The small cap index DWCPF (S-fund) also opened a gap on Thursday, but it did reward TSP investors who jumped in Thursday and were looking for a quick gain on Friday. The dotted red line shows us that this index is still trending higher on a scale of a few months despite trading in a price range below the June highs. This next week's reaction to the CPI will likely give us an idea if this sideways trading will persist past this trend line. The S-fund was down but took the least amount of damage among the TSP stock and bond funds for the week with its 0.89% loss.
The I-fund continues to oscillate. The ETF EFA (I-fund) was down sharply this week creating two open gaps in the process, but it may have started its swing in the other direction on Friday. The ETF chart has been moving to the other side of its 50-day EMA before changing directions. This might be worth paying attention to. The I-fund did lag the TSP funds this week with its 2.20% loss.
The F-fund has lost its attachment to its major moving averages. The jobs reports caused a rise in yields and bond prices fell in their natural response. The question now is whether the bond fund will climb back to its moving averages or if that stage of action has ended. There is an open gap above the current price. The F-fund was down 1.31% for the week to lag both the C and S-fund.
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 the Market Comments page. If you need more help deciding what to do with your account, perhaps one of our Premium Services can help.
Thomas A Crowley
wwww.tsptalk.com
Last Look Report
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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.
