It was a bit of a rollercoaster ride last week as there was little progress made in the budget negotiations. We had sold off into the Monday night deadline, but the market surprised a lot of folks by rallying on Tuesday. The back and forth continued and ended with a strong day on Friday. This either tells us that investors did not want to be out of the market if a deal was made over the weekend, or they just don’t think it is that big of an issue at this time.
Earnings season is coming up quickly and that will add to the market catalysts, but the big one is the debt ceiling deadline on October 17.
Here are the weekly, monthly, and annual TSP fund returns through Friday, October 4…
The S&P 500 (SPY) filled an open gap last week, which was also near the 50-day moving average. That’s a pretty good place for support, and with it now back above the 20-day EMA, it’s hard to be overly bearish here. But one move down below the 20 and 50 day moving averages and we’d have to think more defensively.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds have been holding up well despite the upcoming debt ceiling deadline. A recent consolidation may indicate some concerns about the deadline as yields moved slightly higher (because bond prices moved lower), but this chart shows a bull flag trying to find support at the moving averages and as it stands now, looks bullish for bonds.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
If the government happens to not increase the debt ceiling, that would change this picture in a hurry as yields would rise sharply, and bond prices and the F-fund would sink, but I think that is a long shot.
We could see a little pop in stocks if a budget deal is made, but I suspect the talk will quickly go to the debt ceiling and earnings season, so that will keep investors on their toes.
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 http://www.tsptalk.com/comments.html.
Tom Crowley
www.tsptalk.com
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