TSP Talk – 07/21/12

Europe trumps earnings

Second quarter earnings have been pretty good so far and we hadn’t been seeing the typical mid-July “sell the news” reaction this year, but troubles in Europe with Spanish yields rising well above 7% on Friday, a new high in the euro era, and stocks backed off.

Here are the TSP fund returns for the week of July 16 through 20.

Despite the big loss on Friday, the S&P 500 (C-fund) held onto modest gains for the week while the small caps (S-fund) and international stocks (I-fund) gave up their gains from earlier in the week.

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

We are seeing some signs of weariness in the stock market after the 4% rally off of the July low. This advance-decline line shows that while we were seeing a higher high in the S&P index, the number of stocks moving higher was decreasing. That’s a little internal weakness and a good excuse for investors to do some selling late in the week.

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

Heading into the new week, it is worth noting that the last 7 Mondays have closed in negative territory. We we know that streak can’t last forever, but perhaps that added to reason why investors were aggressively selling on Friday.

The weak mid-July seasonality continues for a few more days, but Monday is trading day number 15 in July, and the stronger late-July seasonality historically starts near trading day 17 of the month, which would be Wednesday of this coming week.

Good luck, and thanks for reading. We will be back here next week with another TSP Wrap Up.

Tom Crowley
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.

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