Stocks had their ups and downs last week as Russia, the Fed, earnings, and economic data battled for the headlines. We saw slight to modest losses by the close on Friday, and again the smaller stocks and the Nasdaq are lagging.
Here are the weekly, monthly, and annual TSP fund returns for the week ending May 9:
The SPY (S&P 500 / C-fund) has been in a narrow sideways trading range for about three weeks now, and actually since mid-February hasn't done much of anything as far as a direction in trend. Sideways action is generally bullish in a bull market as the bears have not been able to do much damage, while the indicators work off any overbought conditions.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The small caps are another issue. There is no sideways action for the Russell 2000 or the Wilshire 4500 (S-fund). The trend has been down since the highs in early March, and the Russell is now flirting with the 200-day EMA. Friday's low gave the index a10% decline from the March high, which is the official definition of a correction. Is that all that the market needed - a correction and support from the 200-day EMA to resume the rally, or is this just the start of something more severe as we head into the weaker part of the year historically?
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds have been stubbornly strong as yields continue to drop. Does the bond market think the economy is weaker than we're being told, or is it still the Fed's bond buying policy that is keeping them afloat, despite the tapering?
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
I think there is positive action developing in some of the indices, but we need to see the small caps and Nasdaq stabilize and stop underperforming. If that happens, we could see some upside breakouts in the Dow and S&P 500 soon.
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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