Stocks began the new year with a slump. The enthusiasm that drove prices higher through November and December left investors in the first week of 2024. As a TSP investor, you must question if this change in character is a warning of more correction to come, or a buying opportunity before earnings season reignites that enthusiasm.
Twice at the end of this week, Thursday and Friday, TSP investors making IFT decisions were fooled by the market prices at the TSP trading deadline. In both days the stock prices were up with vivacity in the early trading only to give up most if not all of those gains and more in the hours after the TSP trading deadline.
On Friday the early excitement was sparked by the latest Jobs Report. The report showed strength and validating expectations of a soft landing but gave little insight into how the Federal Open Markets Committee will deal with the current Fed Fund rate which has elevated borrowing costs across the market. For now, investors believe the FOMC will not raise rates further, but are uncertain about when the committee will start to cut rates. Much of the enthusiasm that kept stock prices buoyant in late 2023 was the idea that the FOMC will begin to cut rates in March. Now that has been priced into the market, diversion from those expectations may call for a correction in prices.
It is easiest to feel bearish when stocks are pulling off sharply from their latest highs, but some may see this as the entry point they've been waiting for. In the coming week investors will get the latest Consumer Price Index numbers, a report card on inflation, followed by the beginning of earnings season on Friday with large banks reporting first. These have real potential to kick start another round of that enthusiasm we were missing this week. Of course, they could provoke prices lower as well.
The TSP Talk AutoTracker was top heavy with stockholders in 2023. Top members showed off their market maneuvering skills by outperforming the C-fund. After the first week of 2024, it was those who could outmaneuver the G-fund who are sitting at the top. These members sitting at the top this week sat in the G-fund all week then jumped into the market Thursday to catch the small gains in stocks on Friday.
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Here are the weekly, monthly, and annual TSP fund returns for the week ending January 5:
The SPY chart (C-fund) broke a rising trend line in this week's pull back. It ended the week sitting at its 20-day EMA, not the best support but could do the job if investors find a new reason to get excited about stocks. There is plenty of space for prices to fall on this chart after the one direction action experienced in the previous two months. SPY is currently a 2.35% decline away from the current 50-day EMA. This week the C-fund fell 1.50%.
The S-fund outperformed for the last two month of 2023. This week it was the underperformer among the TSP funds. The DWPCF (S-fund) index slipped below its 20-day EMA filling an open gap from December in the process while leaving another open gap above. The S-fund fell 3.47% to start off 2024.
The I-fund reached its low for the week early then climbed back more than 0.5% over the last two days. The I-fund is a less popular fund among the TSP Talk AutoTracker members, so the trade was missed by the masses. Overall, the I-fund lost 1.47% for the week.
Bonds were not a safe haven from stocks this week. Although the F-fund lost less than the stock funds, it accumulated a loss of 1.11% over the first four days when bonds are typically thought to be the less risky and less volatile investment. Like the stock charts above, the BND (F-fund) chart is also teetering away from its recent highs and sits close to its 20-day EMA.
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.
