TSP Talk Weekly Wrap Up

Stocks had to endure a Fed policy statement and the July jobs report this past week and the result was 2% or more declines in the indices. Neither seemed to be the direct culprit of the selling, but rather the combination of geopolitical events and weakness in Europe seemed to finally take its toll on stocks.

Here are the weekly, monthly, and annual TSP fund returns for the week ending August 1:

And here are the final numbers for the month of July (the “Chg year” figure below is through July 31):

The Dow is now actually down for the year, but the broader indices are still hanging onto gains. The S&P 500 is still up 5.4%.

The SPY (S&P 500 / C-fund) fell 2.7% last week which is really just a modest loss, but compared to the low volatility rally we have become accustomed to, it opened a few eyes. The chart fell below the 50-day EMA, which is a warning sign, and also broke below the 3+ month rising support line (red). Volume was relatively high on Thursday and Friday so it may be a capitulation of sorts so some kind of relief rally wouldn’t be a surprise here.

Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk

The weekly chart of the S&P 500 shows that the pullback took the index down to the bottom of a long-term rising trading channel. Obviously having it hold here is important since a breakdown could trigger the illusive 10% correction. On average we get one 10% correction per year but it has been three years since we’ve seen one.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk

The Wilshire 4500 (S-fund) is a different story. It’s weekly chart broke down several month ago and it did have an 11% correction. It has been in a sideways consolidation since and if the support line of the blue trading channel can hold up we could see a nice rally this fall. However, there is still some room on the downside if it is going to test that support.

Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk

Bonds have continued to trade within a trading range and the AGG bond ETF has traded between about 108.25 and 109.25 since early May. The 50-day EMA has been holding so this has a bullish bias for now, and this week we could get another breakout test.

Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk

Stock are due for a little relief this week, but whether we start seeing investors selling rallies remains to be seen. It’s been a long time since we’ve seen that kind of action.

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. If you need some help deciding what to do with your account, perhaps one of our premium services can help.

Tom Crowley
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 are commendation. 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.