The S&P 500 had its best week since February closing at a record high of 4712 on Friday. The week started with a three-day winning streak after health officials announced that the omicron COVID-19 variant is less severe than other variants. On Thursday first-time claims for unemployment benefits fell to 184,000, the lowest level since September 1969. Then, on Friday November's consumer price index was reported at 6.8% year over year, the highest inflation rate since 1982. The high inflation reading could lead the Federal Reserve to speed up the bond tapering process and raise interest rates sooner than later. From a technical perspective, two weeks ago I mentioned about the time length between a S&P 500 sell off of 2% or greater and subsequent rebound to a new record high. From that Thanksgiving Day Black Friday to this Fridays closing record, the turnaround was 10 days which was right in the middle of those four previous instances in 2021. Which then got me thinking about, How did the S&P 500 perform AFTER hitting that rebounding new high? Since we have three weeks until the end of the year, I looked at each of those four previous instances three weeks down the road. Three of the four were positive. The only negative we had was the first one in January, when the S&P 500 had a subsequent 2% loss on the last day of those three weeks. That said, the average gain over those four three week periods was 0.96%. Excluding that January event, the average was 1.65%. Splitting the difference, that would give us an S&P 500 close of 4773 at the end of 2021. Maybe Santa will give us a little bit more!! But before that, next weeks big event will be the Feds interest rate decision on Wednesday. For TSP TIPS, this week brings us some unusual Performance Rankings (PR). The PR is calculated using a weighted average of each funds returns over 1, 3, 6 and 12 month periods. A higher PR then defines where to invest. The C fund has a PR Grade of A, while the S, I and F funds all have F Grades. Over the past month, the C fund has a positive return while the other three have negative returns. Lastly, the C fund made two record highs this past week while the other funds are still short of those levels. As such, we are making the following reallocation recommendation.
The S&P 500 had its best week since February closing at a record high of 4712 on Friday. The week started with a three-day winning streak after health officials announced that the omicron COVID-19 variant is less severe than other variants. On Thursday first-time claims for unemployment benefits fell to 184,000, the lowest level since September 1969. Then, on Friday November's consumer price index was reported at 6.8% year over year, the highest inflation rate since 1982. The high inflation reading could lead the Federal Reserve to speed up the bond tapering process and raise interest rates sooner than later. From a technical perspective, two weeks ago I mentioned about the time length between a S&P 500 sell off of 2% or greater and subsequent rebound to a new record high. From that Thanksgiving Day Black Friday to this Fridays closing record, the turnaround was 10 days which was right in the middle of those four previous instances in 2021. Which then got me thinking about, How did the S&P 500 perform AFTER hitting that rebounding new high? Since we have three weeks until the end of the year, I looked at each of those four previous instances three weeks down the road. Three of the four were positive. The only negative we had was the first one in January, when the S&P 500 had a subsequent 2% loss on the last day of those three weeks. That said, the average gain over those four three week periods was 0.96%. Excluding that January event, the average was 1.65%. Splitting the difference, that would give us an S&P 500 close of 4773 at the end of 2021. Maybe Santa will give us a little bit more!! But before that, next weeks big event will be the Feds interest rate decision on Wednesday. For TSP TIPS, this week brings us some unusual Performance Rankings (PR). The PR is calculated using a weighted average of each funds returns over 1, 3, 6 and 12 month periods. A higher PR then defines where to invest. The C fund has a PR Grade of A, while the S, I and F funds all have F Grades. Over the past month, the C fund has a positive return while the other three have negative returns. Lastly, the C fund made two record highs this past week while the other funds are still short of those levels. As such, we are making the following reallocation recommendation.