TSP Talk Weekly Wrap Up

The theme of last week for the stock market was – up. On Monday the S&P 500 broke above strong resistance, and thanks to the Fed, stocks put it in overdrive on Thursday taking the indices near new highs.

Here are the up-to-date weekly, monthly, and annual TSP fund returns through July 12. More gains big for the stock funds, and the F-fund saw a nice gain as well.

After the close on Wednesday, the Fed made it clear that the persistently high unemployment rate and slow economic growth is enough to keep them from pulling the plug any time soon on their bond buying policy. That means cheap money is going to be available for the foreseeable future and that’s what investors wanted to hear. In the past, week economic data would send stocks down, but when there are forces at work that won’t let that happen, the folks fighting the Fed are the ones missing out… and I’ve been one of them lately.

The S&P 500 went into this past week with some serious overhead resistance where the short-term descending resistance line (blue) intersected with the longer-term support line (red) but the index cut right through that. Normally recapturing those old support lines is tougher than this week would have indicated. Now the S&P 500 is flirting with the May intraday highs and Friday was actually the highest closing price ever for the index.

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

After the run we’ve seen it is not a surprise that most indicators are very stretched to the overbought side.

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

This would usually mean either a pullback in the short-term, or at least some kind of sideways consolidation, but with the recent help from the Fed, is it “different this time?” Investors have gotten quite bullish to the point where it is becoming a bit of a negative for stocks.

Earnings season starts to kick into high gear this week so we could have some market catalysts from the larger company reports.

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.

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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