Filling in for TommyIV while he is out of town...
We came into this week after an FOMC meeting where the Fed chose not to raise interest rates. Stocks initially sold off off on that news but this Monday stocks opened higher so the bulls were looking to pounce on the lower prices. However, the bears took charge again and the selling continued on Wall Street this week. When in a bear market, expect bearish results. There will be short-term rebounds that can be played, but in a bear market, traders are selling the rallies so you have to be nimble.
Janet Yellen spoke on Thursday after the close to perhaps ease the market by letting them know rates will be going up before the end of the year. There are two FOMC meetings left this year, one in October and another in December. Stocks initially rallied on the news, but sold off into the close on Friday as investors seem as confused as ever. My interpretation is the Fed is saying... We don't want people to think the economy is so weak that we can't raise rates.
Here are the weekly, monthly, and annual TSP fund returns for the week ending September 25:
The SPY (S&P 500 / C-fund) broke down from its rising wedge and no matter how you look at this chart, it's difficult to find a bullish case. Thursday's positive reversal may have looked promising, and we did get some early upside follow-through on Friday, but the sellers were right there and the indices closed near their lows of the day, and actually Friday's close was the lowest close of the week. The C-fund lost 1.36% for the week.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
TheDow Completion Index (S-fund) also broke down from its rising wedge and bear flag. It took a little longer than I might have expected, but once it did the bears pushed it and we saw this index nearly retest the August lows. Although possibly oversold, we could easily be visiting the previous lows some time this week. The S-fund lost 3.20% on the week.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-fund) did retest the August lows but it quickly rebounded and may be attempting to try to fill the large open overhead gaps on the chart. Those gaps may be filled, but that is still a big bear flag with the potential to break down. Not all tests of lows hold so there are no green lights here yet. Until this chart gets back above some resistance and the 50-day EMA, expect the bears to continue to put the pressure on the EFA. The I-fund lost 1.97% for the week.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-fund) traded in a fairly tight range last week despite the weakness in stocks. Normally we would see money flow into the bond market when stocks are struggling, but it's hard to get excited about bonds when the Fed is getting ready to raise rates. Bond prices go down when yields go up (or vice versa). So, the F-fund lost 0.24% for the week.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Good luck andthanks for reading! We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at http://www.tsptalk.com/comments.php.If you need more 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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The legal stuff: This information is for educational purposes only! This is not advice or are commendation. 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.
