Investors grew optimistic this week that the worst of the coronavirus is over and the Federal Reserve is saving the economy; the outcome was the greatest week of gains for stocks since 1974. Stocks gapped up early this week maybe off of optimism that the worst had been priced in, or maybe volatility had stocks swinging that way. Whatever the true cause the momentum did not retract. The bulls took over the short trading week and the fear of missing out syndrome turned stocks into a vacuum for cash.
After the previous week's action it was hard to find a technical analyst who was not declaring a test of the lows was the next move for the market. These were calls formed from patterns seen in previous market fallouts but sometimes its when a pattern becomes obvious that it's likely run its course. Also against technical analysts was the Federal Reserve. The Fed announced more stimulus in the form of $2.3 trillion through lending; dumping even more capitol into the economy which a lot will inevitably end up in equities. The Fed's moves are celebrated by some for 'saving' this damaged economy. Others would rather let the free market run its course instead of kicking potentially more destructive problems down the road while potentially hiking inflation.
Will this rally continue? The bears are pointing to the uncertainty of the economic damage that has and will continue to accumulate from the virus outbreak. Earnings will becoming in soon and its hard to imagine there will be much to celebrate. The bulls arguments are their star point guard is the Federal Reserve who will do whatever necessary to keep money moving, stimulus packages from the government will becoming in the coming weeks and their is potential upside for the economy, and stocks trade mostly on speculation of the future and as long as their is a 'light and the end of the tunnel' investors will run with it and buy stocks while they seem cheap.
The S-fund outperformed this week with a gain of 18.04%. Bond market volatility has quieted and we saw tight trading ranges through the week until bonds were up Friday to give the F-fund a 0.57% gain for the week.
Here are the weekly, monthly, and annual TSP fund returns for the week ending April 9th:
The SPY (S&P 500 / C-fund) surged through its 20-day EMA early in the week and eventually hit its highs just above its 50-day EMA before ending the week just below the moving average. This week's action turned what looked like stagnation into an upward trajectory for stocks. Two gaps below the 20-day EMA makes a pull-back more convincing but stocks can get unreasonable when they've been stimulated by big banks. The fear of missing out was a large driver of this week's action along with the Fed but there is still damage to be dealt with for the companies this index represents. The C-fund was up 12.14% for the week.
The Dow Completion Indices (S-fund) did not reach its 50-day EMA but nonetheless was the outperformer for the TSP funds this week. The S-fund was up 18.04% in just four days. The index now has open gaps in either direction to fill but there is also still space above before testing its 50-day EMA.
EFA (EAFE Index /I-fund) was above its 20-day EMA as well and filled an open gap from mid-March at Tuesday's open. The top of the open gap marked the highs of the week for the index which was a point of resistance during Thursday's action. The index is in similar shape as the other stock indices but did not get to test its 50-day EMA for resistance. Gaps in either direction give a hard determination for the next move. The I-fund was up 8.20% for the week.
AGG's (Bonds / F-fund) slowed down dramatically in trading ranges for the last couple weeks. The index did surge higher Friday surpassing the bottom trend of the previous trading channel before the volatility spiked in the bonds market. The F-fund was up 0.57% this week.
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
www.tsptalk.com
Weekly Wrap-Ups Archive
Facebook | Twitter
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.
After the previous week's action it was hard to find a technical analyst who was not declaring a test of the lows was the next move for the market. These were calls formed from patterns seen in previous market fallouts but sometimes its when a pattern becomes obvious that it's likely run its course. Also against technical analysts was the Federal Reserve. The Fed announced more stimulus in the form of $2.3 trillion through lending; dumping even more capitol into the economy which a lot will inevitably end up in equities. The Fed's moves are celebrated by some for 'saving' this damaged economy. Others would rather let the free market run its course instead of kicking potentially more destructive problems down the road while potentially hiking inflation.
Will this rally continue? The bears are pointing to the uncertainty of the economic damage that has and will continue to accumulate from the virus outbreak. Earnings will becoming in soon and its hard to imagine there will be much to celebrate. The bulls arguments are their star point guard is the Federal Reserve who will do whatever necessary to keep money moving, stimulus packages from the government will becoming in the coming weeks and their is potential upside for the economy, and stocks trade mostly on speculation of the future and as long as their is a 'light and the end of the tunnel' investors will run with it and buy stocks while they seem cheap.
The S-fund outperformed this week with a gain of 18.04%. Bond market volatility has quieted and we saw tight trading ranges through the week until bonds were up Friday to give the F-fund a 0.57% gain for the week.
Here are the weekly, monthly, and annual TSP fund returns for the week ending April 9th:
The SPY (S&P 500 / C-fund) surged through its 20-day EMA early in the week and eventually hit its highs just above its 50-day EMA before ending the week just below the moving average. This week's action turned what looked like stagnation into an upward trajectory for stocks. Two gaps below the 20-day EMA makes a pull-back more convincing but stocks can get unreasonable when they've been stimulated by big banks. The fear of missing out was a large driver of this week's action along with the Fed but there is still damage to be dealt with for the companies this index represents. The C-fund was up 12.14% for the week.
The Dow Completion Indices (S-fund) did not reach its 50-day EMA but nonetheless was the outperformer for the TSP funds this week. The S-fund was up 18.04% in just four days. The index now has open gaps in either direction to fill but there is also still space above before testing its 50-day EMA.
EFA (EAFE Index /I-fund) was above its 20-day EMA as well and filled an open gap from mid-March at Tuesday's open. The top of the open gap marked the highs of the week for the index which was a point of resistance during Thursday's action. The index is in similar shape as the other stock indices but did not get to test its 50-day EMA for resistance. Gaps in either direction give a hard determination for the next move. The I-fund was up 8.20% for the week.
AGG's (Bonds / F-fund) slowed down dramatically in trading ranges for the last couple weeks. The index did surge higher Friday surpassing the bottom trend of the previous trading channel before the volatility spiked in the bonds market. The F-fund was up 0.57% this week.
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
www.tsptalk.com
Weekly Wrap-Ups Archive
Facebook | Twitter
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.
