Stocks were up everyday this week, large and small caps produced new all time highs, and collectively we saw stocks best week since early November. More fiscal stimulus is being put together by the Federal government and though the details may take time to be worked out, investors love to be coaxed by its possibility. So with more free money in the works, bad news becomes good news again. The gains Friday weren't outlandish especially with the momentum leading up to Friday, but they were on the backbone of a relatively weak jobs report Friday that was just short of expectations. But investors are looking to buy anything that will increase the likelihood of increased stimulus.
When it comes to the stock market, looking back in retrospect is useless; to a certain degree. Nothing tells us that the future will resemble the past and most patterns only last until they are noticed. The small time Reddit traders gave market players a buying opportunity the previous week and looking back it was obvious. But it also would have been an obvious warning sign if stocks had their worst week in months this week. Looking back on a week or months in retrospect to contemplate what you should have done is useless, but looking back on the week and months to gather a sense of the market moving forward is necessary to building a plan. What did we learn the last couple weeks? High levels of liquidity will drive prices higher with side blinders. Investors love easy money and government stimulus and low interest rates from the Federal Bank can fuel the fire without real growth. Investors trust government aid will protect the economy and stock market from a collapse. It is currently a risk off environment but do not mistake it for being sustainable and without consequence if the economy can't catch up.
The S-fund outperformed this week with a 7.52% gain. The F-fund lagged as the risk on trades left the safety of the bond markets.
Volatility settled down this week coming off the excitement of the short squeeze frenzy. The big time wall street players have so far taken back the influence on the market and for now have simmered what was looked at as a possible threat to market stability.
Here are the weekly, monthly, and annual TSP fund returns for the week ending February 5:
The SPY (S&P 500 / C-fund) had another all time high produced this week coming off its 50-day EMA the previous week to add 4.67% for the C-fund. It was an impressive run for large caps but still lagged the performance of small caps. The open gap form the previous week was filled along the way.
The Dow Completion Index (S-fund) also produced a new all time high this week but did so with greater strength than large caps. The S-fund 7.52% just this week and at the beginning of February already has a more than double the gains for 2021 over the C-fund. That's not a promise of more gains or a guarantee to continue to outperform but we must give credit to this relentless market in the midst of a pandemic.
EFA (EAFE Index / I-fund) did not extend prices to new highs but still added 2.75% gains for the week. This was a lagging performance compared to the C and S-fund but a decent gain nonetheless. The index made its way back above its 20-day EMA by close on Thursday and extended Friday to nearly close the open gap left behind in January.
BND (Bonds / F-fund) lagged the TSP funds with a 0.38% loss for the week. The risk on mentality had investors leaving safer investment like bond to get into the stock momentum. More stimulus means for debt for the government and higher interest rates on bonds. This has driven the price of bonds down recently.
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
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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.
When it comes to the stock market, looking back in retrospect is useless; to a certain degree. Nothing tells us that the future will resemble the past and most patterns only last until they are noticed. The small time Reddit traders gave market players a buying opportunity the previous week and looking back it was obvious. But it also would have been an obvious warning sign if stocks had their worst week in months this week. Looking back on a week or months in retrospect to contemplate what you should have done is useless, but looking back on the week and months to gather a sense of the market moving forward is necessary to building a plan. What did we learn the last couple weeks? High levels of liquidity will drive prices higher with side blinders. Investors love easy money and government stimulus and low interest rates from the Federal Bank can fuel the fire without real growth. Investors trust government aid will protect the economy and stock market from a collapse. It is currently a risk off environment but do not mistake it for being sustainable and without consequence if the economy can't catch up.
The S-fund outperformed this week with a 7.52% gain. The F-fund lagged as the risk on trades left the safety of the bond markets.
Volatility settled down this week coming off the excitement of the short squeeze frenzy. The big time wall street players have so far taken back the influence on the market and for now have simmered what was looked at as a possible threat to market stability.
Here are the weekly, monthly, and annual TSP fund returns for the week ending February 5:
The SPY (S&P 500 / C-fund) had another all time high produced this week coming off its 50-day EMA the previous week to add 4.67% for the C-fund. It was an impressive run for large caps but still lagged the performance of small caps. The open gap form the previous week was filled along the way.
The Dow Completion Index (S-fund) also produced a new all time high this week but did so with greater strength than large caps. The S-fund 7.52% just this week and at the beginning of February already has a more than double the gains for 2021 over the C-fund. That's not a promise of more gains or a guarantee to continue to outperform but we must give credit to this relentless market in the midst of a pandemic.
EFA (EAFE Index / I-fund) did not extend prices to new highs but still added 2.75% gains for the week. This was a lagging performance compared to the C and S-fund but a decent gain nonetheless. The index made its way back above its 20-day EMA by close on Thursday and extended Friday to nearly close the open gap left behind in January.
BND (Bonds / F-fund) lagged the TSP funds with a 0.38% loss for the week. The risk on mentality had investors leaving safer investment like bond to get into the stock momentum. More stimulus means for debt for the government and higher interest rates on bonds. This has driven the price of bonds down recently.
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.
