Stocks resumed their downward slide early last week but finally stabilized on Thursday morning and rallied strongly into Friday. The week ended with losses, but it could have been a lot worse if not for the big reversal, and Friday morning’s better than expected jobs report helped complete what looks like a potential “V” bottom.
Here are the weekly, monthly, and annual TSP fund returns for the week ending October 3:
The SPY (S&P 500 / C-fund) briefly penetrated a longer-term support line on Thursday, but it managed to close above it and created a long “kangaroo-tail” bottom. The big reversal can trigger several days of follow-through in the direction of the reversal, and often can act as an intermediate or long-term market bottom. At least that’s what the bulls are counting on for next week as it tests the new steep descending resistance line and the 50-day EMA.
The Wilshire 4500 (S-fund) broke below the 200-day EMA early last week and fell sharply before Thursday’s reversal. It closed below the 200-day EMA so that will be the resistance test early next week. I also noted that the Wilshire has had a pattern of reversing direction when starting a new month. Should that continue, it could be a bullish month for the S-fund.
The EFA (EAFE Index / I-fund) has been hit hard, not only because of weakness in the European markets, but because the dollar has been relentlessly strong, and that puts pressure on the international share prices. The technical picture is awful with the index trading well below the 200-day EMA, but there was a positive reversal and if U.S. stocks can follow-through on Thursday’s reversal, the I-fund should get some relief as well.
The AGG (Bonds / F-fund) continued to rally last week while stocks dropped, but once the U.S. stocks reversed upward, bond pulled back after filling that large open gap near 109.60. There is a gap below that will be a target this coming week.
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 TSP Talk Market Commentary. If you need some help deciding what to do with your account, perhaps one of our premium services can help.
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