The week ended on a bullish note as the S&P 500 closed at 4471, within two percent of a new record. Strong earnings drove the market higher with 80% of companies reporting results that have topped earnings per share expectations. On the economic front, initial unemployment fell below the 300,000 level for the first time in the pandemic era. On the inflation front the Consumer Price Index (CPI) rose 0.4% in September, while the yearly rate came in at 5.4% for the largest jump since January 1991. That said, monthly retail sales posted a surprise increase of 0.7%, exceeding expectations of a 0.2% decline. Lastly, Social Security put out the news that beneficiaries will see a 5.9% increase in 2022, making it the largest increase since a 7.4% boost in the 1980s. However, I did go back to the CPI numbers and found out that inflation was 13.5% in 1980, and it made me think back to those years of double-digit mortgage and money market rates. Getting back on track, we define a bullish market when the price is above the 50 day Moving Average (MA), which is above the 200 Moving Average. On 28 September the S&P 500 crossed below its 50 day MA, but on Thursday the S&P 500 gave us an initial buy signal when it crossed back above that 50 day MA. So what is next? Last week I mentioned that the S&P 500 remains range bound just below the midpoint between its most recent high of 4536 and subsequent low of 4300. Confirmation of this bullishness would be if the S&P 500 were able to break above that 4536 resistance level. Combine that with a strong start to earnings season and the probability for a bullish run into years end is high. For TSP TIPS, we did see both the S and C funds cross above their 50 day MAs and the I fund is just short. As such, we are recommending an increase in equity exposure and stand by for mid-week alert if the S&P 500 makes a new record high.
The week ended on a bullish note as the S&P 500 closed at 4471, within two percent of a new record. Strong earnings drove the market higher with 80% of companies reporting results that have topped earnings per share expectations. On the economic front, initial unemployment fell below the 300,000 level for the first time in the pandemic era. On the inflation front the Consumer Price Index (CPI) rose 0.4% in September, while the yearly rate came in at 5.4% for the largest jump since January 1991. That said, monthly retail sales posted a surprise increase of 0.7%, exceeding expectations of a 0.2% decline. Lastly, Social Security put out the news that beneficiaries will see a 5.9% increase in 2022, making it the largest increase since a 7.4% boost in the 1980s. However, I did go back to the CPI numbers and found out that inflation was 13.5% in 1980, and it made me think back to those years of double-digit mortgage and money market rates. Getting back on track, we define a bullish market when the price is above the 50 day Moving Average (MA), which is above the 200 Moving Average. On 28 September the S&P 500 crossed below its 50 day MA, but on Thursday the S&P 500 gave us an initial buy signal when it crossed back above that 50 day MA. So what is next? Last week I mentioned that the S&P 500 remains range bound just below the midpoint between its most recent high of 4536 and subsequent low of 4300. Confirmation of this bullishness would be if the S&P 500 were able to break above that 4536 resistance level. Combine that with a strong start to earnings season and the probability for a bullish run into years end is high. For TSP TIPS, we did see both the S and C funds cross above their 50 day MAs and the I fund is just short. As such, we are recommending an increase in equity exposure and stand by for mid-week alert if the S&P 500 makes a new record high.