TSP Talk Weekly Wrap Up

It was a big week for the stock market as the indices continued their rally off of the early August lows. We’ve seen this kind of action before as once again the bulls took charge after the bears failed to take the market down to an elusive 10% correction.

Here are the weekly, monthly, and annual TSP fund returns for the week ending August 22:

Bonds were down as investor opted for stocks. The I-fund has lagged as the struggling European economies and strengthening dollar has held it back.

The SPY (S&P 500 / C-fund) broke out to new highs this past week, although some early weakness on Friday’s saw it dip below the breakout point temporarily. That will be the key area in the short-term – whether it can hold above 199.

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

The Wilshire 4500 (S-fund) is still quite a way from the early summer highs as the small caps have lagged behind their large cap older siblings. The chart looks fine as it trades in a rising trading channel, and it seems to be in a little sideways consolidation that should help it regain strength, but it does have to remain above that rising support.


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

The EFA (I-fund) has lagged and the big rally in the dollar over the last several month has been a big reason. There is still a large open gap above that may want to get filled, so if this chart starts to roll back over before it gets filled, that would be a bad sign. The immediate concern here is the break of the rising support line on Friday, but that support was fairly steep and we probably shouldn’t expect it to maintain that type of angle of incline.

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

The AGG (Bonds / F-fund) pulled back this week as stocks rallied, but this chart shows that there was a major breakout in early August, and that old resistance line has become key support – along with the 20-day EMA (exponential moving average).

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

Whether that support line breaks or not will have an impact on the stock market as well. If bonds hold above it, it probably means stocks will feel some pressure. If the AGG falls below the support line, it could be a green light for stocks.

One thing we have been pointing out is the negative historical bias during the 6-weeks between mid-to-late-August and the end of September of a mid-term election year. Seasonality is not a primary indicator, but this one is fairly strong and worth a mention.

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
Facebook | Twitter

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.