The S&P 500 snapped its three-week winning streak closing at 4327 on Friday. The week started with a record close for the S&P 500 on Monday and the Dow closed just shy of the 35,000 level. Second quarter earnings had its first week of reporting and beat expectations. Unfortunately, favorable earnings reactions were muted by inflation fears after June CPI was reported as increasing 5.4% compared to one year ago, which is the highest jump since 2008. Not even Federal Reserve Chairman Powell could ease fears after his semiannual testimony to the House Committee on Financial Services on Wednesday. Fridays market also reacted negatively to a U.S. consumer sentiment index reading of 80.8 for the first half of July. This was down from 85.5 last month and worse than the 86.5 reading economists had projected. From a technical perspective, just two weeks ago I mentioned that The Top 5 holdings of the S&P 500 have about a 20% weighting and they are Apple, Microsoft, Amazon, Facebook and Google. Those five stocks continue to make new highs and dominate S&P 500 performance, but the other 495 stocks that are making new highs is few and far between. This underlying weakness has also spread across other sectors including the Russell 2000 small cap index. To complement this analysis, we also follow a portfolio of 30 stocks for individual buy/sell criteria, and right now it is displaying an unusual split. Of those 30, only three (MSFT, AMZN, MRNA) are still in a hold position while the other 27 are awaiting a buy signal. To illustrate further, just last weekend Virgin Galactics Richard Branson was taking us to the edges of space, and that SPCE stock sat at $49.20. SPCE then crash burned this week, closing Friday at $30.20 for nearly a 40% loss. For TSP TIPS, the C fund mimicked the S&P 500 and started the week with a new record high. This Friday the C fund also had 1) a continued "buy" signal, 2) an A Performance Ranking and 3) its price above its 50 day Moving Average. Conversely, the S and I funds gave us 1) "sell" signals, 2) C Performance Rankings and 3) their price below their 50 day Moving Averages. As such, we are going to move to a more defensive position this week with our allocation.
The S&P 500 snapped its three-week winning streak closing at 4327 on Friday. The week started with a record close for the S&P 500 on Monday and the Dow closed just shy of the 35,000 level. Second quarter earnings had its first week of reporting and beat expectations. Unfortunately, favorable earnings reactions were muted by inflation fears after June CPI was reported as increasing 5.4% compared to one year ago, which is the highest jump since 2008. Not even Federal Reserve Chairman Powell could ease fears after his semiannual testimony to the House Committee on Financial Services on Wednesday. Fridays market also reacted negatively to a U.S. consumer sentiment index reading of 80.8 for the first half of July. This was down from 85.5 last month and worse than the 86.5 reading economists had projected. From a technical perspective, just two weeks ago I mentioned that The Top 5 holdings of the S&P 500 have about a 20% weighting and they are Apple, Microsoft, Amazon, Facebook and Google. Those five stocks continue to make new highs and dominate S&P 500 performance, but the other 495 stocks that are making new highs is few and far between. This underlying weakness has also spread across other sectors including the Russell 2000 small cap index. To complement this analysis, we also follow a portfolio of 30 stocks for individual buy/sell criteria, and right now it is displaying an unusual split. Of those 30, only three (MSFT, AMZN, MRNA) are still in a hold position while the other 27 are awaiting a buy signal. To illustrate further, just last weekend Virgin Galactics Richard Branson was taking us to the edges of space, and that SPCE stock sat at $49.20. SPCE then crash burned this week, closing Friday at $30.20 for nearly a 40% loss. For TSP TIPS, the C fund mimicked the S&P 500 and started the week with a new record high. This Friday the C fund also had 1) a continued "buy" signal, 2) an A Performance Ranking and 3) its price above its 50 day Moving Average. Conversely, the S and I funds gave us 1) "sell" signals, 2) C Performance Rankings and 3) their price below their 50 day Moving Averages. As such, we are going to move to a more defensive position this week with our allocation.