Investors are losing reasons to buy or hold onto stocks. The bulls and bears fought for territory early this week, but the bears showed dominance surrounding the latest Consumer Price Index. The sellers took over the market late Thursday as speculations of a poor CPI report grew. The low expectations did not save the bulls when the CPI report came in at a highest year-over-year pace since 1981. All three TSP stock fund indices/ETF gapped down Friday morning and slipped further into the day from there.
The high CPI report brought doubt that inflation had peaked. Having been days ahead of the next FOMC meeting did not help hesitant investors either. The FOMC is expected to raise interest rates by another 50 points next week, but the high inflation number raises the likelihood that the Fed will raise rates by 75 points for the first time since 1994. The Federal Reserve is fighting against the economy to lower inflation while avoiding a recession. Strong consumer spending has fed the rise in inflation but has also held up corporate earnings. This leaves the Fed aiming for a sweet spot of fiscal tightening that is not so obvious, and that uncertainty does not bring comfort to investors looking for the optimal location for their money.
From a technical standpoint, all three stock charts below have lost support, gapped down, and are within reach of the May lows. The lows established in May were argued by the bulls to be the bottom of this years extended decline. That argument grew more and more reasonable as prices held up off the lows through most of June so far, but two days of lengthened losses have lost credence to the bottom argument. We are likely to see a test of those lows in the coming week or weeks unless the Federal Reserve does something to entice the bulls in the coming meeting, an unlikely event.
But cash is not in rotation to new locations. Bonds were also down significantly for the typical standard. For TSP participants the G-fund is and has been a great place to keep wealth away from questionable assets and is up nearly 1% for the year. Although the average investor can't afford to hold cash for too long with inflation at record highs, so something has to give.
The FOMC meeting is Tuesday and Wednesday of this week and investors will react to the rate decision.
Looking for an edge on your TSP return? Get the Last Look Report for as low as $4.19 / month. The report is a daily email on the TSP Talk AutoTracker moves, news, forum threads, and more before the IFT deadline. The service is aimed to help you make your own IFT decisions by giving you relative information 30 min prior to the deadline including where the members of TSP Talk are moving their money.
Here are the weekly, monthly, and annual TSP fund returns for the week ending June 10:
All three TSP stock funds had similar weeks and all three lost all the gains that had accumulated in June.
SPY (S&P 500 / C-fund) stated the week how it spent the previous, trading between its 20-day and 50-day EMAs. But the 20-day could not hold as support once the CPI expectations and results brought sentiment and prices down. the ETF gapped down Friday morning and ended the day and week at its lows. The C-fund was up for the week at Wednesday's close. But a Thursday's and Friday's losses brought the fund down to a 5.04% loss for the week.
The Dow Completion Index's (S-fund) week was nearly identical to SPY. The S-fund ended Wednesday with gains but slipped below its 20-day EA Thursday and followed up with a gap down Friday and slipped further into the day. The S-fund lagged the TSP funds with a loss of 5.13% for the week.
The main difference to EFA (EAFE Index / I-fund) and the other stock funds was the gap that was closed in the midst of Friday's losses. A May open gap was closed and sometimes we see this as a source of support. The I-fund fell 4.99% for the week.
BND (Bonds / F-fund) trended down this week continuing the late action of the previous week. The action characteristic changed Friday when bonds grew more volatile and had the greatest trading rang in some time. This put BND down to a new low for the year. The F-fund was down 1.50% for the week and is now down more than 10% for the year.
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
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.
The high CPI report brought doubt that inflation had peaked. Having been days ahead of the next FOMC meeting did not help hesitant investors either. The FOMC is expected to raise interest rates by another 50 points next week, but the high inflation number raises the likelihood that the Fed will raise rates by 75 points for the first time since 1994. The Federal Reserve is fighting against the economy to lower inflation while avoiding a recession. Strong consumer spending has fed the rise in inflation but has also held up corporate earnings. This leaves the Fed aiming for a sweet spot of fiscal tightening that is not so obvious, and that uncertainty does not bring comfort to investors looking for the optimal location for their money.
From a technical standpoint, all three stock charts below have lost support, gapped down, and are within reach of the May lows. The lows established in May were argued by the bulls to be the bottom of this years extended decline. That argument grew more and more reasonable as prices held up off the lows through most of June so far, but two days of lengthened losses have lost credence to the bottom argument. We are likely to see a test of those lows in the coming week or weeks unless the Federal Reserve does something to entice the bulls in the coming meeting, an unlikely event.
But cash is not in rotation to new locations. Bonds were also down significantly for the typical standard. For TSP participants the G-fund is and has been a great place to keep wealth away from questionable assets and is up nearly 1% for the year. Although the average investor can't afford to hold cash for too long with inflation at record highs, so something has to give.
The FOMC meeting is Tuesday and Wednesday of this week and investors will react to the rate decision.
Looking for an edge on your TSP return? Get the Last Look Report for as low as $4.19 / month. The report is a daily email on the TSP Talk AutoTracker moves, news, forum threads, and more before the IFT deadline. The service is aimed to help you make your own IFT decisions by giving you relative information 30 min prior to the deadline including where the members of TSP Talk are moving their money.
Here are the weekly, monthly, and annual TSP fund returns for the week ending June 10:
All three TSP stock funds had similar weeks and all three lost all the gains that had accumulated in June.
SPY (S&P 500 / C-fund) stated the week how it spent the previous, trading between its 20-day and 50-day EMAs. But the 20-day could not hold as support once the CPI expectations and results brought sentiment and prices down. the ETF gapped down Friday morning and ended the day and week at its lows. The C-fund was up for the week at Wednesday's close. But a Thursday's and Friday's losses brought the fund down to a 5.04% loss for the week.
The Dow Completion Index's (S-fund) week was nearly identical to SPY. The S-fund ended Wednesday with gains but slipped below its 20-day EA Thursday and followed up with a gap down Friday and slipped further into the day. The S-fund lagged the TSP funds with a loss of 5.13% for the week.
The main difference to EFA (EAFE Index / I-fund) and the other stock funds was the gap that was closed in the midst of Friday's losses. A May open gap was closed and sometimes we see this as a source of support. The I-fund fell 4.99% for the week.
BND (Bonds / F-fund) trended down this week continuing the late action of the previous week. The action characteristic changed Friday when bonds grew more volatile and had the greatest trading rang in some time. This put BND down to a new low for the year. The F-fund was down 1.50% for the week and is now down more than 10% for the year.
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
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.
