What Happened this Week?
The Bulls were back in business this week. The S&P 500 recovered the previous week's losses and then ended the week with its highest price for 2023. The bears had an influence after the Federal Reserve's hawkish pause soaked in, but economic data shifted that influence back to the bulls claiming a bull market.
Jerome Powell was front and center to start the week as he took questions from congress members for two days. Investors were reminded of Fed's plans to increase rates this year yet were not given any new information. Direction was back and forth to start the week but the bulls found their footing Tuesday as they built on momentum that would hold for the rest of the week.
After reclaiming the previous week's losses, the market opened higher Friday where the personal-consumption expenditures (PCE) price index, rose 3.8% from a year earlier, its lowest reading in two years. The data tells us consumer spending continues to rise but its pace of growth is slowing. This is enough to ease fears of a recession anytime soon while also lowering expectations of the Fed's need to continue being aggressive with rate hikes in the coming FOMC meetings.
The TSP Funds
The S-fund's outperformance was the story for TSP funds this week. The S-fund was up more than the C-fund for the first four days of the week. In that time we noticed many TSP Talk AutoTracker members shifting into the S-fund this week in the Last Look Report. The C-fund outperformed the S-fund for the first half of 2023, but there are theories that the market gains will broaden across the whole market and the gap between the C and S-fund returns will tighten up in the second half.
That was not the case on Friday when the C-fund gained nearly double the S-fund's return. But the S-fund managed to hold the best return for the week with its 3.87% gain. The C-fund ended the week with a 2.36% gain.
The F-fund lagged the TSP funds this week with the only loss among them. The F-fund fell 0.27% for the week.
Here are the weekly, monthly, and annual TSP fund returns for the week ending June 30:
The SPY (C-fund) spent the first days of the week recovering the previous week's losses. Friday's gains lifted the C-fund to its highest price for 2023. It was the icing on the cake for a successful first half for the Bulls. The C-fund leads the TSP funds after a half year of trading with a 2023 return of 16.88%. This week's contribution was a 2.36% gain in the C-fund, but that was not the best return among TSP funds for the week.
Friday's rally left an open gap behind, a technical feature that tends to pull prices back to fill the void. This open gap was a common trait of all three TSP stock fund charts.
The award for the best return for the week goes to the S-fund. The small-cap index DWCPF outperformed the large-cap index S&P 500 throughout the first four days of the week. Investors looking for opportunities in the market have been riding small-caps with expectations for the market to broaden out and small-caps to catch up to large-cap stocks. However, that trend ended Friday when the C-fund gained nearly twice as much as the S-fund for the day. Nonetheless, it wasn't enough to make up for the S-fund's consistent outperformance the rest of the week. The S-fund was up 3.87% for the week.
Taking a step back to a five-month view of the DWCPF (S-fund), we see this index still has some ground to cover before matching its highs. Does this give it an advantage or disadvantage over the C-fund?
While the C and S-funds ended the month at a high, the I-fund could not regain the previous week's losses. The I-fund lagged the TSP stock funds with a 1.97% gain. The ETF EFA chart has open gaps on both sides of the current price. This chart has been giving buy and holders whiplash but has also provided some opportunity for swing traders.
The price current price ended at the top of the previous trading channel the ETF was in for more than a month in April and May. Will this trading channel take hold again?
Bonds lagged stocks this week. The bond ETF BND (F-fund) was down this week while stock rallied. Its prices had been clinging close to the entanglement of the 50 and 200-day EMA. However, the ETF took a sharp pullback Thursday. The gap left behind was partially filled on Friday to pull the F-fund off its low for the week. The F-fund fell 0.27% for the week to solidify a 0.36% loss for June.
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.
