Stocks struggled to progress this week despite a string of positive earnings from large names that one would think were worth celebrating. The actual response was to sell the news or lack enthusiasm. The trading range in large caps tightened up this week all while momentum has decelerated. Profit taking from the over extended indices took place this week but that doesn't say too much about the weeks ahead. Excitement from easy gains in stocks is decreasing while the economy keeps growing as shown through earnings and economic reports of all sorts. There is some gloom over the global economic recovery which is threatened by continued rise in Covid cases in large economies like India. Small caps less affected by are still underperforming the more tied to global economic business in the large indices.
Inflation is also on the radar of investors. The concern is it is growing faster than ideal. An outrun of inflation carries its own problems but what investors may be more worried about is if inflation does grow too fast the dovish Fed will be forced to hike interest rates in attempt to counter the inflation rate. Low interest rates have been a key ingredient in allowing stock to continually rise without much consequence. So far the Fed is remaining dovish and is in a wait and see mode not seeming eager to do anything. But of course that can change quickly if conditions constitute action.
The C-fund outperformed this week with a slight gain of 0.04%. The other stock funds and bonds were down for the week. The I-fund lagged with a 1.25% loss.
Earnings season has plenty more to offer and, despite stock price reaction, it has been good news and positive numbers so far.
Here are the weekly, monthly, and annual TSP fund returns for the week ending April 30:
The SPY (S&P 500 / C-fund) tightened up and flattened out this week. New highs were produced Thursday but they stand alone as the index gave back its gains Friday ending the week nearly flat with a 0.04% gain. This slight gain was enough to outperform the other TSP funds and were all negative outside the G-fund. Rising support is bound to catch up if momentum doesn't pick back up next week. Earnings will continue but good earnings out of large names did not help the index this week. The C-fund also outperformed the TSP funds for April with a 5.33% gain on the month.
The Dow Completion Index (S-fund) spent most of the week above the March peak but below the high of February. An intraday slip below the March peak Thursday was recovered by the close but Friday opened and closed below and nearly made it back to its 20-day EMA. The net result was a loss of 0.51% for the week but the index ended April with a 4.23% gain.
EFA (EAFE Index / I-fund) chopped around this week between gains and losses. The index sold off Friday to solidify a negative week. The index closed below its 20-day EMA Friday for the first time since March, the same day it touched its 50-day EMA. Not looking great for this index from a technical stand point. Momentum has halted and support has been broken. The I-fund lagged the TSP funds this week with a loss of 1.25%.
BND (Bonds / F-fund) slipped this week after five straight weeks of gains from the fund. The index had slipped below its 20-day EMA Thursday for the first time since the beginning of April. But it was only for a day, the index climbed back above the 20-day EMA and closed between it and the 50-day EMA above. This puts the price at the bottom of the month and a half long rising trading channel. The F-fund down 0.17% for the 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
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