Stocks experienced a strong bounce off their most recent lows this week, and it was a week that you would not want to watch from the sidelines. Both the C and I-funds had weekly returns over 5% while the S-fund outperformed with a gain of over 7% in five days.
Stocks struggled through most of October. Many investors were expecting some relief, but this week's action was unimaginable. There does not seem to be a direct source of the rally outside of an oversold bounce that kept momentum and was fueled at the end of the week with FOMO and a jobs report that could be used to argue the end of rate hikes.
The Federal Open Markets Committee met this week. They did not raise rates as expected but also did not have much more insight to provide investors. The FOMC is capable of raising rates higher but are letting the current high rates they've established along with the higher rates brought on by the bond market to have their effect on the market first.
Investors may be starting to see a light at the end of the tunnel. With borrowing costs possibly at their highs, the soft-landing of inflation without a recession is again looking plausible.
Looking at the short-term though, we must be cautious of whether this week's momentum can carry prices higher into next week. Did the weekend kill the FOMO fueling the rally? We should not expect a repeat of this week, but we might see new buyers stick around to at least keep price buoyant. Those looking for an entry point may want to see some consolidation of these gains before buying into another rally.
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Here are the weekly, monthly, and annual TSP fund returns for the week ending November 3:
SPY (C-fund) made a quick move back above its 200 and 50-day EMAs. A feat that was impossible to imagine coming into the week. The C-fund was up every day this week accumulating a 5.88% through the five days. Along the way the ETF SPY left behind two open gaps which can have their own gravitational pull on price action. Friday was the first day since mid-September that the ETF spent an entire day above its 50-day EMA.
DWCPF (S-fund) outperformed the SPY (C-fund) for the week but doesn't seem as accomplished technically when comparing the charts. The S-fund gained 7.35% for the week bringing major relief to anyone who has been held stocks in October. But the index still sits below its 200-day EMA. DWPCF did close above 50-day EMA on Friday for the first time since early September. Like SPY, DWCPF now has open gaps below the current price that could cut the momentum after the weekend.
The bond market made its move higher starting on Wednesday. The F-fund price rose 2.30% in the final three days of the week. This rapid price increase pushed the BND chart above its 50-day EMA for the first time since the end of August. For the week the F-fund added 1.98%.
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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