A seventh straight week of losses for the S&P 500 (C-fund) is the longest streak since 2001. Stocks had a promising start to the week through Tuesday, but stocks sold off hard Wednesday leading to the S&P 500 deepest single day loss since June of 2020 and extending the index to its lowest price of the year. Analysts have been waiting for the S&P 500 to join small cap indices (S-fund) in a bear market (characterized as 20% down from the high). This happened intraday Friday, but it was short lived after a late rally into the close erased the day's losses and put the S&P 500 out of the technical bear market.
Although not in a technical bear market, the turn around from Tuesday's rally to Wednesday's deep sell-off is a bear market characteristic. The psychological threshold of bear market territory may have introduced new buyers Friday but this is not a market looking forward to the future. Major retailers Target and Wal-Mart both saw their largest single day sell-offs since 1987 this week after earnings reports showed higher costs are eating into their profits despite decent consumer spending. Tech giants saw similar weakness in prior weeks and it has now carried over to retail. Investors are running out of places to hide within the stock market.
And of course we love to point out that the Fed is on course to raise borrowing costs every chance they get this year; another hindrance to the corporate outlook. The next FOMC meeting is three weeks away starting June 14th. If you are market timing during this season it may be wise to do quick in and out IFTs as rallies have proven to be short lived and follow by more selling. Many have been hurt trying to time the bottom, it may time to change your game plan and wait for the market to take its course and react accordingly.
There were a couple places to find gains this week. The F-fund outperformed U.S. stocks and added 0.60% for the week. But the true out performer was the overlooked I-fund which was up 1.29% this week. Just over 2% of allocations among non-premium TSP Talk AutoTracker members are currently in the I-fund.
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Here are the weekly, monthly, and annual TSP fund returns for the week ending May 20:
SPY (S&P 500 / C-fund) hits its peak in line with declining resistance keeping the ETF within a falling trading channel of the last month. SPY reached two new closing lows for the year Wednesday and Thursday. A late rally Friday to erase earlier losses prevented a third day of new lows for the year. Even so, the C-fund lagged the TSP funds for the week with a loss of 3.00%, its seventh straight week of losses.
Not as bad but not much better was the performance of the Dow Completion Index (S-fund). The S-fund also moved from early gains in the week to losses to close the week. A declining resistance trend line held this week and the index looked to be breaking down out of a bear flag before rallying back within the flag late Friday. The end result was a 1.71% loss in the S-fund for the week.
EFA (EAFE Index / I-fund) gapped up Tuesday where it met resistance from its 20-day EMA. The gap was filled on Wednesday's sell-off but 0.71% gains Friday put the ETF back at the top of that open gap and ending the I-fund with a gain of 1.29% for the week to outperform the TSP funds.
BND (Bonds / F-fund) has seen a shift in momentum after putting together its second straight week of gains. This week the ETF closed Friday above the 20-day EMA; it had not done this since early March. The ETF is now ten trading days off its low this year. The F-fund gained 0.60% this week to outperform the U.S. stock funds.
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
wwww.tsptalk.com
Last Look Report
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