TSP Weekly Wrap-Up – Buying Opportunity, or Warning?

Weekly TSP Wrap-up from TSP Talk

Buying opportunity, or warning?

The market was hit with a plethora of information this past week, including the Goldman Sachs hearing, the continuing debt concerns in Greece, Portugal, and now Spain, a slightly weaker than expected GDP report (economic growth), the ramifications of the oil spill in the Gulf of Mexico and the signing of Arizona’s new immigration law.

After all was said and done, stocks were down and particularly hit hard on Friday as investors seemed reluctant to be overly exposed to stocks over the weekend.

For the week the TSP stock funds took on some losses. The C-fund lost 2.49%, the S-fund dropped 2.97%, and the I-fund fell 3.08%. The F-fund (bonds) gained 0.65% as investors ran for safety. The G-fund was up 0.06%.

The final numbers for April were mixed. The S-fund had a very good month, and despite falling off its best levels, it finished with a gain of 4.82%. The C-fund was up a respectable 1.58% in April, but the I-fund dropped 2.35%. The F-fund was able to pick up 1.07%, while the G-fund was up 0.28%.

Volatility and volume have been picking up lately, and unfortunately that can be indicating a change coming. The bulls won’t wave the white flag just yet. As long as the S&P 500 is trading above its 50 day exponential moving average (50-day EMA), you can expect a bullish outcome. It is currently about 16 points above that EMA so the bulls are still thinking, “buy the dips”.

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

I would expect some kind of test of that 50-day EMA this week, and it will give the bulls a test as well. Will they step up, or is the debt news starting to wear on them?

The market has come a long way in a short period of time, but in a strong bull market, the 50-day EMA tends to hold on the first test. A bounce off of the 50-day EMA would likely trigger another wave of buying, but things could get more vulnerable after that wave and I would not be surprised to see a more pronounced correction closer to the summer months.

Market tops are not usually in the shape of an upside down “V”, and while the pullbacks can be steep, the tops can take months to develop and we appear to be only at the beginning, if in fact we are near a peak at all.

Good luck, and thanks for reading. We will be back here next week with another TSP Wrap Up.

Tom Crowley

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