An uplifting start to the week quickly turned into a dreadful second half for stockholders. The bulls lost their grip on the market as investors were balancing earnings, economic data, the Federal Reserve, and rising bond yields.
The start of the earnings season has had more companies beat expectations than miss. The problem is strong earnings may already be priced into the market. This leaves investors more sensitive to missed earnings and is not helping the indices.
The market was unsure how to feel about strong retail numbers on Tuesday. But considering how the rest of the week played out, investors were not impressed. They may be too worried about rising rates and keeping the Fed at bay to embrace strong economic data.
Federal Reserve Chairman Jerome Powell spoke publically on Thursday. Although he did not move out of his typical script. He did nothing but fuel the sellers. Powell kept to the narrative that the Fed could still raise rates again, although it is very unlikely to come in the November 1st meeting. But as always, they are closely watching the economy, inflation data, and the Treasury yields.
The Fed last raised rates in their late July meeting. The 10-year Treasury yield has risen more than a full percentage point since then. This has been the weight on the sinking F-fund prices as well as a headwind to the stock market.
Ultimately, the C and S-funds fell more than 2% for the week after both ended Monday with gains of over 1%.
The S-fund was holding a gain of 2.58% for the week after Tuesday and ended the week with a loss of 2.52%.
The only place to hide was the G-fund with its 0.09% return for the week. The F-fund fell a sharp 1.73% for the week.
Some of the best TSP Talk AutoTracker performers moved into stocks on Friday. They see the markets as suddenly oversold and want to take the ride higher as the prices correct themselves.
Others have given up on holding stocks and moved to the sidelines until they see any real hope for the long-term.
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Here are the weekly, monthly, and annual TSP fund returns for the week ending October 20:
SPY (C-fund) officially closed the open gap left open in September. The top of the open gap ended up being the high for the week. The ETF's price slipped close to its lows for the month by the end of the week. The C-fund fell 2.38% for the week.
Looking at the last 10 months, the SPY (C-fund) has a similar bull flag formation that eventually broke out higher at the beginning of April. Will this and the 200-day EMA inspire some more buying next week?
The S-fund has reached a price range it has not seen since late May. This price range lingered for about 2 months from March to May. Its lows could be tested but you would not want to be holding the S-fund on the way down.
The I-fund is heading toward a low from earlier in the year. This low from March was the platform for a rally that got the I-fund to its high at the end of July. Could it invite new buyers this time around?
Bond prices bounced back some on Friday, but they are a main focus for investors as they slip deeper at an unprecedented persistence. The F-fund fell 1.73% 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 TSP Talk - Market Commentary. If you need some help deciding what to do with your account, perhaps one of our premium services can help.
Thomas Crowley
(TommyIV)
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.
