TSP Talk Weekly Wrap Up

Despite a huge day after the jobs report announcement on Friday, the stock funds ended the week flat to lower. Except for Thanksgiving week, there has been a trending pattern of weakness toward the beginning of the week, a bottom near Wednesday, then an attempt to recapture the gains going into the end of the week. Without the jobs report, we may have seen this broken and stocks would have almost certainly ended the weak much lower. Instead we saw the unemployment rate surprisingly drop to 7.0% and stocks were off to the races on Friday.

There are many reasons to question this sharp drop in the unemployment rate, but this is not the place to dive into that. What we care about is that investors took advantage of the strong report. But what we know from experience is that we often see large reactions caused by the jobs report – whether up or down – get reversed during the following week, particularly if there was a gap opening, which there was.

Here are the weekly, monthly, and annual TSP fund returns through Friday, December 6…

Last week the S&P 500 (SPY / C-fund) broke down from the rising wedge that we had been watching, and it spent a couple of days testing the support from the 20-day EMA before the jobs report triggered enthusiastic buying and, as we mentioned, created a small open gap that we will need to watch since gaps almost always get filled.

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

Bonds have been hurting lately and the charts give us reason to be concerned. The head and shoulders pattern we see on this 7 to 10-year bond fund, broke down last week, and head and shoulders patterns are generally bearish formations. The downside target for this H&S breakdown would be near 99.00 so I’m not a big fan of the F-fund right now. Unless and until this chart moves back above the neckline of the H&S, I would avoid bonds and stick with the G-fund as an alternative to stocks.

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

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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