TSP Talk Weekly Wrap Up

The stock market and the TSP stock funds experienced their worst week since June. Rising bond yields and troublesome warnings from some of the larger U.S. retailers, plus continued concerns over the Fed tapering their bond buying, was enough to get investors to lock in some profits from this summer’s big gains.

Here are the up-to-date weekly, current month, and annual TSP fund returns through August 16.

The S&P 500 opened a gap above that should eventually get filled, but some key support levels are now broken, including the 50-day EMA, so technically there are some cracks in the chart that might suggest an intermediate-term pullback, rather than just a quick, buyable dip. Of course we’ve said that before this year and the market has remained resilient. There is still a gap left open from early July that could be a target for this pullback.

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

The recent series of Hindenburg Omen signals once again seems to have preceded a pullback. Whether this turns into a correction (-10%) or even a crash remains to be seen. Crashes are very rare but some of the most infamous crashes were preceded by the HO signals so it’s out there for you to think about.

One of the concerns for the bulls is the continued rise in bond yields, which have doubled since last summer.

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

With yields near 1.5%, the stock market was the only game in town. When we start pushing toward 3%, investors may start considering that as an alternative to stocks, particularly if they think stocks are going to pullback. The Fed is trying to keep interest rates down, but the market place is having their say.

The short-term indicators are oversold so a relief rally is very possible, but the intermediate-term indicators suggest the selling may not be over, and rallies may need to be sold.

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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