Stocks soared this week giving all the TSP stock funds more than 2.5% in gains with the S-fund outperforming with a gain of 3.39%. Hopes are growing high for a resolution in the trade issues encouraging investors to move their money into stocks. Stocks are a bet on the future, so as long as the U.S. and China seem to be approaching a deal the more investors will chase the pay off. This may mean an actual trade deal is not ideal for stocks. It would take away major catalyst to look forward to and the deal may not be satisfactory in itself. What lingers behind the optimism of a potential trade deal is the slowing global economy with China having a big hand in the falling numbers.
The bears continue to call for a top of this rally off the December lows but this is simply a reaction to what has been seen in the past with such set ups. A little more than a year ago stock prices rose at a steep pace and when the buying did stop the result was a quick and significant sell-off. Those calling for a pull-back would see this as a healthy move for the market and a chance for buying opportunities rather than chasing rallies. This is not my own call of a top but rather a reminder of what’s possible and what to protect yourself against. Stocks are not necessarily expensive right now; indices are reaching levels around early December and stocks had already fallen off their highs for a couple months prior.
Bonds fell this week as investors retreated to stocks with the headlines of progress on the trade deal. The F-fund fell 0.1% for the week.
Here are the weekly, monthly, and annual TSP fund returns for the week ending February 15th:
The SPY (S&P 500 / C-fund) bounced nicely off its 200-day EMA into this week. The index was just short of the December highs but it was nice for investors to see small cap indices to move above their December highs. The C-fund was up 2.56% for the week.
The Dow Completion Index (S-fund) surpassed its November highs this week after a nice bounce off its 200-day EMA. How high will this index extend before a healthy pull-back? I say expect it when you least expect it. The S-fund outperformed with a gain of 3.39% for the week.
EFA (EAFE Index /I-fund) was up for the week and extended back to the levels of its 200-day EMA which held as resistance. An open gap from last week was closed but another was opened Tuesday morning. Rising support has the potential to keep that gap open for bit as they intersected by the end of the week. The I-fund was up 2.81% for the week.
AGG (Bonds / F-fund) took a slight step back this week but remained in its rising trading channel. Bond holders were inclined to move back to stocks with trade talks in the news but the chart did not take any real damage. The F-fund fell 0.1% for the week.
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 the Market Comments page. If you need more help deciding what to do with your account, perhaps one of our Premium Services can help.
Thomas A Crowley
Weekly Wrap-Ups Archive
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The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. 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.
It is really interesting seeing week from week the changes, really appreciate these weekly wrap ups!