After a one percent gain on Monday, the S&P 500 couldn't hold onto summer rally gains and closed at 3873 on Friday. On Tuesday the August CPI report came in at 8.3% on a year-over-year basis, hotter than expected and sending the markets to their worst day since 11 June 2020. Then triple witching options Friday rolled in with Fedex reporting lower earnings guidance which sent shares down 21%, their worst day ever. All told another volatile week with three days of over one percent moves. From a technical perspective, the S&P 500 continues to consolidate between its 16 June low of 3636 and 16 August high of 4325. Looking back to that 11 June 2020 similar occurrence, we researched where the market went in the 3 months afterward, which now would take us to the 3 months until 2022 year end. That said, the S&P 500 retraced that 2020 loss in those 3 months, going from 3002 to 3363, or 12% higher. While history does not always repeat itself, it does give credence to the market recovering from oversold conditions with a reversion back to the mean. In this upcoming week we have the Fed meeting, giving us their decision on inflation related interest rate hikes. For TSP TIPS, both the C and S funds matched their underlying indices and were down for the week. Additionally, September is one of those months where the TSP two exchanges/month comes into play. We are basically at mid-September and have used one of our exchanges. If we increased our cash allocation, this would preclude us from further equity increasing transactions in September. As such, we are recommending no allocation changes this week as the markets sits in an oversold condition with the potential for a bounce back similar to 2020.
After a one percent gain on Monday, the S&P 500 couldn't hold onto summer rally gains and closed at 3873 on Friday. On Tuesday the August CPI report came in at 8.3% on a year-over-year basis, hotter than expected and sending the markets to their worst day since 11 June 2020. Then triple witching options Friday rolled in with Fedex reporting lower earnings guidance which sent shares down 21%, their worst day ever. All told another volatile week with three days of over one percent moves. From a technical perspective, the S&P 500 continues to consolidate between its 16 June low of 3636 and 16 August high of 4325. Looking back to that 11 June 2020 similar occurrence, we researched where the market went in the 3 months afterward, which now would take us to the 3 months until 2022 year end. That said, the S&P 500 retraced that 2020 loss in those 3 months, going from 3002 to 3363, or 12% higher. While history does not always repeat itself, it does give credence to the market recovering from oversold conditions with a reversion back to the mean. In this upcoming week we have the Fed meeting, giving us their decision on inflation related interest rate hikes. For TSP TIPS, both the C and S funds matched their underlying indices and were down for the week. Additionally, September is one of those months where the TSP two exchanges/month comes into play. We are basically at mid-September and have used one of our exchanges. If we increased our cash allocation, this would preclude us from further equity increasing transactions in September. As such, we are recommending no allocation changes this week as the markets sits in an oversold condition with the potential for a bounce back similar to 2020.