TSP Talk Weekly Wrap Up

After a couple of weeks of selling, stocks started to rebound from some extreme oversold conditions last week. The question now is whether we have seen the lows or if this is just a relief rally. Geopolitical events are still playing catalyst as solid gains on Friday quickly turned into losses when violence was sparked in the Ukraine.

Here are the weekly, monthly, and annual TSP fund returns for the week ending August 15:

There was a lot of green in the TSP funds last week and only the I-fund is showing a loss in August. The economic slowdown in European continues to be the drag there.

The SPY (S&P 500 / C-fund) is back above the important 50-day EMA and it filled the open gap that we have been watching. The S&P 500 has held up OK. Not quite as well as the Nasdaq, but it has outperformed the small caps and the international stocks.

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

The Wilshire 4500 (S-fund) broke above the descending trading channel and the 50-day EMA – all good, but Friday’s wide “outside day” makes for an interesting situation. An “Outside Day” is a day where the high is higher than the prior day’s high, and the low is lower than the prior day’s low. Outside days can indicate a reversal is coming, but a reversal from what – the short-term rally, or the longer-term decline? They call that formation a “doji” candlestick – an indication of indecision, and that was due to the news out of the Ukraine.

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

The EFA (I-fund) filled a small open gap on Friday (red) but the big blue open gap looks like it needs to be filled. The problem is, it has to get back above the 50-day EMA to do that, and that’s not always easy in a downtrend. The GDP in Germany came in negative, and France has been in a new recession. Can this index break the downtrend with that kind of economic data?

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

Bonds broke out from a long consolidation this past week, just as many thought bond yields couldn’t go any lower. (Bond yields go down when bond prices go up.) I always say that bond traders are a little more savvy than stock traders and unless last week’s breakout was an emotional reaction to the headlines, the bond market may be trying to tell us not to get too exited about the recent rally in stocks.

Chart provided courtesy of www.stockcharts.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. If you need some help deciding what to do with your account, perhaps one of our premium services can help.

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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