TSP Talk Weekly Wrap Up – 01/07/12


Stocks opened with a bang on the first trading day of 2012, but we actually saw the week's highs hit within the first hour of trading in the new year.



For the TSP, the C-fund gained 1.67% on the week, the S-fund was up 1.65%, the I-fund lost 0.41% because of rally in the dollar, while the F-fund (bonds) was down 0.13%, and the G-fund was up 0.03%.



I see good things in the charts for the intermediate-term, but in the short-term there are signs of fatigue. The inverted head and shoulders pattern is a bullish formation, and we have already seen the breakout.


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

With the short-term indicators showing we may need more of a digestion of the recent gains, it would play right into the typical action on an inverted H&S.


For those of you in the bond fund (F), the fund that had the best return in 2011, the yield on the 10-year T-Note briefly made a higher high over the prior high which could indicate a change in trend, but it did not last very long as the yield closed back under the 50-day EMA.



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

Since bond prices and the F-fund go up when yields go down, this little battle with the 50-day EMA could be an important one. Should the resistance hold and yields stay below that 2% level, the F-fund should do OK. But if we start seeing higher highs in the yield and the trend changes from down to up, the F-fund would likely struggle. That would probably be a good sign for the stock market.

The jobs report came in better than expected on Friday and if the economic data continues to improve, the Fed may have to consider raising interest rates at some point and that would also hurt the F-fund.

Does it really matter which fund you put your TSP in, or if you should try to move it around a little instead of just buying and holding? Take a look at our members' returns for 2011. You will see clearly that where you allocate your money and when you make transfers can have a huge impact on your return and your balance.

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

Tom Crowley
www.tsptalk.com


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