TSP Commentary for 04/20/20

This is your TSP Watchdog UPDATE for the week ended April 17, 2020.

Stocks rallied this week – actually, on Friday – with the S&P 500 gaining 3.04%, the Dow gaining 2.20% and the NASDAQ gaining 6.09%.

Everything continues to be about Covid-19 and our response to it.  The market is paying little attention to anything else.

After a see-saw week of back and forth price movements – literally alternating between gains and losses every day thru Thursday – all the gains for the week came on Friday.

The back and forth was produced by shifting focus between the ravaging economic impact (think unemployment, production declines and business failures), the devastating human impact (think rising death tolls, skyrocketing suicide rates and domestic violence) and the emerging glimmer of hope that lockdowns may begin to ease fairly soon.

Friday’s market surge was largely in response to an announcement from the WH Thu evening of a plan to begin opening the economy on a state-by-state basis.

As the curve begins to flatten, focus will shift to more economic data – which is likely to get worse because March was only a partial shutdown month – and how the economy responds to gradual re-opening efforts.

Don’t expect a straight-line recovery – in the economy or in the markets.  There will likely be good days and bad days.

In our TSP Watchdog database, all the TSP funds remain on negative trends.  The C fund, S fund and I fund are as close to their pre-collapse levels as they’ve been, but they are still not back above their trend lines.

With all funds still on negative trends, we remain 100% in the G fund – a safe harbor while the storm rages around us.

If you pressed me to speculate about how things will unfold from here, I would say things will be volatile for a while – with more big swings in both directions but not much in the way of a sustainable move.  I would say we are likely to re-visit / re-test the recent lows.

But, fortunately, TSP Watchdog is not about my guessing.  It is about objective trend analysis – which considers only the trend of the individual TSP funds.  If/when we see changes to the trends, we will alert you so you can take action you feel is appropriate.  Until then, we will remain on the sidelines – safely tucked away from all the volatility – in the G fund.

Please feel free to reply to this email with any questions.

Scot B.