TSP Talk – Weekly Wrap Up

The market’s relentless move higher continued as new highs were made on the S&P 500 every day last week. Earnings have been generally strong, except for Apple’s disappointment, and imagine the gains we may have seen in the indices if Apple was involved in this rally rather than tumbling and being the worst performing stock in the S&P 500 so far this year.

Here are the TSP fund returns for the week of January 22 through January 25.

The S&P 500 has been in a strong rising trend since December 31st, and actually the trend goes back to mid-November if you take out the capital gains related late December sell-off. If you recall, investors were locking in the lower capital gains rate by selling in December. Once January came around, they were able to buy back into the market and here we are three weeks later with a 150 point gain in the S&P since that November low.

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

How long can a rally like this last? Usually longer than would seem reasonable. As we have talked about before, in 1896 – 1987, the last time the capital gains rate was increased, we saw a similar start to the new year with very minor dips during the first few weeks of the year.

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

Once we got into February, the swings became a little more pronounced but the trend remained solidly higher with only minor 3 or 4 day pullbacks all the way through March of 87.

Will it happen again? No one knows, but following a powerful trend rather than fighting it can produce very nice gains. However, when strong trends end and support breaks, there can be a swift correction so keep an eye on the charts for signs of trouble. Right now there aren’t many danger signs on the chart, but that could easily change.

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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