An early pop higher at Monday's quickly hit a peak before price action began to resume the falling trend that began in early February. By Thursday afternoon large cap stocks seemed destined for another week of losses, but a dovish comment by a non-voting Fed member Raphael Bostic was credited to have kick started a reverse in sentiment and rally that would continue through the close of Friday. Bostic shared his support for a 0.25% rate hike by the Fed in the upcoming FOMC meeting that starts March 21. This was not too bold of a statement as the probability of a 0.25% rate hike was already sitting around 70%. But he also supported caution by the Fed moving forward which is what the bull wanted to hear.
We may credit the initial pop on Thursday to Bostic, however it set off an unrelated cascade of money into equities. The strength from mid-Thursday through Friday seemed more like a spontaneous chemical reaction than an actual switch in optimism among investors about inflation and the Fed. Economic data was light this week outside of some strength in the service sector that has remained resilient. Confused on how to make sense of the latest action, talking heads have painted the current market narrative to be: economic resilience outweighs concerns about inflation and the Fed's plans to increase interest rates. But as soon as we see a pull-back, that sentence can easily be re-written to: economic resilience amplifies concerns about inflation and the Fed's plan to increase interest rates. This is what we saw early in February after the +500K jobs added unexpectedly and began a reversal in January's gains.
A very anticipated Jobs report comes out this coming Friday which will be the encore to February's outlier of a report. Will we see another unusual report? Or will we see corrected numbers from February's report? Either way it is likely to spark movement.
It seems to be a very confusing time for everybody, and the best thing you can do is a make a trading plan and stick to it. It is early in the month so I expect most of you still have your 2 IFTs to work with. Make an entry or exit plan that works for your peace of mind. There is opportunity to pull a decent return in an oscillating market but remain realistic to your financial and mental capabilities.
Easily seen in retrospect, we saw some technical trends that could have been seen as a buying opportunity. And we did see that this week for some members in the TSP AutoTracker.
The I-fund outperformed this week but was not too far ahead of the 2023 return frontrunner S-fund. Both gained 2.53% and 2.33% respectively. The C-fund lagged among the stock funds but nearly had a gain of 2% for the week after ending Wednesday in negative territory for the first three days of the week.
The F-fund was down 0.64% after Thursday but rallied Friday to end the week with a gain of 0.13%.
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Here are the weekly, monthly, and annual TSP fund returns for the week ending March 3:
SPY (S&P 500 / C-fund) gapped up Monday morning and opened above its 50-day EMA, that was a short-lived win for the bulls and the price slipped from there and eventually fell below the 200-day EMA for the first time since January by Tuesday's close. As mentioned above, there was a quick change in price action mid-Thursday that took the C-fund from a loss for the week by Wednesday's close to a 1.96% gain for the week by the end of Friday. That put the price back above the 20, 50, and 200-day moving averages.
The Dow Completion Index (S-fund) had a similar week but did not suffer the degree of losses as seen in the large cap C-fund. The chart never closed below it 50 or 200-day EMAs during the week, but rather the moving averages seemed to hold as support. The chart may be facing resistance to start the new week. The S-fund gained 2.33% for the week.
The EAFE Index /EFA (I-fund) gapped up to start the week, closed that gap, found support from the 50-day EMA, and rally with U.S. stocks on Thursday and Friday putting back above its 20-day EMA. The I-fund outperformed for the week with a gain of 2.53%.
BND (Bonds / F-fund) seemed to be down for the count this through Thursday. The falling trend continued as yields continued to rise. The F-fund was down 0.63% for the week through Thursday and gained 0.76% on Friday alone to give the F-fund a slight gain of 0.13% 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
wwww.tsptalk.com
Last Look Report
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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.
