Stocks had a nice week after stabilizing on Monday and Tuesday, and following through without much problem into the weekend. A strong close on Monday, something we have not seen in a while, turned into a sell-off on Tuesday morning, but the impressive V-like reversal that afternoon set up a decent close for the holiday shortened week. The charts improved some, but my concern is whether the action was just a typical pre-holiday move that tends to get reversed after a holiday?
Here are the weekly, monthly, and annual TSP fund returns through Friday, April 17. Still seeing some red in stocks for the month of April but last week's gains took the sting out of that and actually pushed the I-fund into positive territory for the month. The U.S. dollar has been weak and that helped the I-fund.
The SPY (S&P 500 / C-fund) recaptured the 50-day EMA and the support line from the old December high. All good signs, but again I'm concerned that the pre-holiday action could be a fake-out. The weekly seasonality chart after Easter weekend is actually not bad, although Monday is one of the historically down days. So even if we see some negative action on Monday, we may need to wait until Tuesday to see if last week's rally was "real" or not.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) also recaptured a very important support line that goes back to 2012. That's good but it is still below the 50-day EMA. Every other sharp pullback like the one we just experienced over the last several weeks has been a very good buying opportunity. Is there a reason why we should think that this one should be any different?
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Actually, there is one particularly good reason why this time might be different. This year happens to be a mid-term election year, and on average, April has been the peak of the market during these mid-term years historically.
Bonds have been trading within a tight trading range for about three months now. I'm still looking for a breakout in one direction or the other before having any bull/bear opinion on the F-fund. You could be playing the short swings within the range, but I'd prefer waiting and using the G-fund as the safe haven until they decides what they are going to do.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Good luck,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.
Tom Crowley
www.tsptalk.com
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