The S&P 500 marked its second consecutive down week, closing Friday at 5123. The first two days of the week were flat in anticipation of the Consumer Price Index (CPI) and Producer Price Index (PPI) readings before Wednesday and Thursday opens respectively. Coming in hotter than expected, March CPI rose 0.4%, matching Februarys rise, while the annual rate came in at 3.5%, up from Februarys 3.2% annual increase. As such, the S&P 500 gapped down at the open and spent the rest of Wednesday near opening lows. Then, on PPI Thursday, March wholesale prices came in at 0.2%, below estimates of 0.3%. The markets welcomed this news, and the S&P 500 regained most of Wednesdays losses. On Friday there was a plethora of news which roiled the markets. First came Iran/Israel geopolitical pressure. Second, big banks reported earnings and net interest income, which measures the difference between what banks earn on their assets and pay out on their deposits, fell in the first quarter. Banks stocks led the selloff, which spread to the broader market when the April consumer sentiment index came in at 77.9, below the 79.9 estimate. All told, the S&P 500 closed near session lows with a daily loss of over 1%. From a technical perspective, several sell indicators were triggered this week. The S&P 500 is 1) now firmly below its 20 day Moving Average (MA) and 2) on an intraday basis, dipped below its 50 MA on Friday. 3) the S&P 500 weekly bar chart had this weeks high and low lower than the previous weeks high and low. And 4), the S&P 500 weeks low was lower than the previous two weeks of gains (3/18 and 3/25), for a 2 bar bear reversal. Next week earnings season continues, and economic news is relatively light. For TSP TIPS, the C fund mimicked the above-mentioned S&P 500 action. The S and I funds also followed in step, but both closed the week below their 50 day MAs. In light of the above, we are recommending the following new investment mix.
The S&P 500 marked its second consecutive down week, closing Friday at 5123. The first two days of the week were flat in anticipation of the Consumer Price Index (CPI) and Producer Price Index (PPI) readings before Wednesday and Thursday opens respectively. Coming in hotter than expected, March CPI rose 0.4%, matching Februarys rise, while the annual rate came in at 3.5%, up from Februarys 3.2% annual increase. As such, the S&P 500 gapped down at the open and spent the rest of Wednesday near opening lows. Then, on PPI Thursday, March wholesale prices came in at 0.2%, below estimates of 0.3%. The markets welcomed this news, and the S&P 500 regained most of Wednesdays losses. On Friday there was a plethora of news which roiled the markets. First came Iran/Israel geopolitical pressure. Second, big banks reported earnings and net interest income, which measures the difference between what banks earn on their assets and pay out on their deposits, fell in the first quarter. Banks stocks led the selloff, which spread to the broader market when the April consumer sentiment index came in at 77.9, below the 79.9 estimate. All told, the S&P 500 closed near session lows with a daily loss of over 1%. From a technical perspective, several sell indicators were triggered this week. The S&P 500 is 1) now firmly below its 20 day Moving Average (MA) and 2) on an intraday basis, dipped below its 50 MA on Friday. 3) the S&P 500 weekly bar chart had this weeks high and low lower than the previous weeks high and low. And 4), the S&P 500 weeks low was lower than the previous two weeks of gains (3/18 and 3/25), for a 2 bar bear reversal. Next week earnings season continues, and economic news is relatively light. For TSP TIPS, the C fund mimicked the above-mentioned S&P 500 action. The S and I funds also followed in step, but both closed the week below their 50 day MAs. In light of the above, we are recommending the following new investment mix.