S&P 500 hit record close at 3025 with 76% of companies beating earnings expectations
Both C and S funds reached new highs Friday, triggering bullish buy signals
Fed rate cut expected Wednesday plus China trade talks resuming could boost markets further
Strong earnings and a nice GDP report drove the S&P 500 to a record close of 3025 on Friday. About 40 percent of S&P 500 companies have reported earnings with 76 percent exceeding expectations. GDP data showed the U.S. economy expanding by 2.1%, which also was higher than expected. Next week brings more expectations with a 25 basis point Fed rate cut announcement on Wednesday afternoon, followed by continued strong Unemployment rate and Consumer Sentiment numbers on Friday. And let’s not forget that trade talks with China also resume next week. From a technical analysis perspective, we’re seeing a narrowing width of the S&P 500 Bollinger Band (BB) channel. The BB Index measures this width and it currently stands at 27 (low volatility), while it stood at 189 (high volatility) last December. A low number signals a consolidation period, which is usually followed by a breakout. When combined with the strong economic news, the case for a bullish breakout to the upside becomes more likely. For TSP TIPS, both the C and S funds recorded new highs on Friday and gave us "buy" signals. As such, we’ll be utilizing our second exchange of the month and are recommending the following allocation.
Recommended Allocation (Moderate Profile)
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Strong earnings and a nice GDP report drove the S&P 500 to a record close of 3025 on Friday. About 40 percent of S&P 500 companies have reported earnings with 76 percent exceeding expectations. GDP data showed the U.S. economy expanding by 2.1%, which also was higher than expected. Next week brings more expectations with a 25 basis point Fed rate cut announcement on Wednesday afternoon, followed by continued strong Unemployment rate and Consumer Sentiment numbers on Friday. And let’s not forget that trade talks with China also resume next week. From a technical analysis perspective, we’re seeing a narrowing width of the S&P 500 Bollinger Band (BB) channel. The BB Index measures this width and it currently stands at 27 (low volatility), while it stood at 189 (high volatility) last December. A low number signals a consolidation period, which is usually followed by a breakout. When combined with the strong economic news, the case for a bullish breakout to the upside becomes more likely. For TSP TIPS, both the C and S funds recorded new highs on Friday and gave us "buy" signals. As such, we’ll be utilizing our second exchange of the month and are recommending the following allocation.