It was all about the Fed this week as the S&P 500 stood at 5,702 at Fridays closing bell. This week was split in two with 1) Pre-Fed and 2) Post-Fed. On Monday, Tuesday, and up until 1400 on Wednesday the S&P 500 was essentially flat. Then Fed Chair Powell took the stage and announced a 50 basis point cut in rates, the first cut in the four years since the pandemic. That started the fireworks with six up/down cycles in the last two hours of trading and the S&P 500 going from a high of 5,689 to its closing low of 5,618. Overnight investors had sweet dreams and the S&P 500 gapped up on Thursday, opening at 5,702 and crossing 5,700 for the first time in history. Next came a record intraday high of 5,733 at about 1400, just 24 hours after Powells announcement. At the close the S&P 500 made a new record closing high of 5,713, with a daily gain of over 1%. Investors took a break on Friday, catching their breath after Thursdays action, closing at 5,702 and back where it opened on Thursday. From a technical perspective, the S&P 500 has closed higher in 6 of the last 7 weeks, and 9 of the last 10 months (November through August). This is definitely a Let the Trend Be Your Friend type of market. So how has the S&P 500 performed after the initial Fed rate cut? Well that depends on whether you are in a recession or not. Dating back to 1970, in the six months following the first reduction, the S&P 500 slumped an average of 4% if the economy was in a recession, which compares to a 14% gain when the Fed cut in a non-recessionary period. Most economists say we are in the latter, and well get more insight on Thursday when we get updated GDP numbers. For TSP TIPS it was a nice week as all three equity funds made new 52 week highs, have Composite Scores maxed out at 100, and have increasing Performance Ranking numbers. As such, we recommend no changes to our current investment mix and anticipate staying at 100% invested for much of October, unless the markets turn south dramatically. That said, we are also offering a new subscription called Mutual Fund Window (MFW) TIPS, which utilizes buy/sell recommendations for the ProFunds Ultra NASDAQ 100 (UOPIX) fund. It is tailored for aggressive investors as it uses the NASDAQ 100 as its underlying index, but it is a 2:1 ratio fund. That means that if the index goes up 1% on a daily basis, the fund gains 2%. Conversely, if the index goes down 1% on a daily basis, the fund goes down 2%. As such, this is not a buy and hold fund. For those of you not familiar with MFW, any exchange from the TSP into MFW counts as one of your 2 monthly reallocations. You will be receiving a follow-on email with more information, but if you are thinking about it, now is the time to act if you have not used both September reallocations. If you have, the first week of October would be good as we will probably only have one Performance Ranking Polishing Allocation in October. While this strategy is tailored for the TSP MFW, it could also be used on a Schwab account with a minimum transfer of $500 and no transaction fees. Hope this helps and standby for an End of Quarter/Year to Date Zoom call in mid-October.
It was all about the Fed this week as the S&P 500 stood at 5,702 at Fridays closing bell. This week was split in two with 1) Pre-Fed and 2) Post-Fed. On Monday, Tuesday, and up until 1400 on Wednesday the S&P 500 was essentially flat. Then Fed Chair Powell took the stage and announced a 50 basis point cut in rates, the first cut in the four years since the pandemic. That started the fireworks with six up/down cycles in the last two hours of trading and the S&P 500 going from a high of 5,689 to its closing low of 5,618. Overnight investors had sweet dreams and the S&P 500 gapped up on Thursday, opening at 5,702 and crossing 5,700 for the first time in history. Next came a record intraday high of 5,733 at about 1400, just 24 hours after Powells announcement. At the close the S&P 500 made a new record closing high of 5,713, with a daily gain of over 1%. Investors took a break on Friday, catching their breath after Thursdays action, closing at 5,702 and back where it opened on Thursday. From a technical perspective, the S&P 500 has closed higher in 6 of the last 7 weeks, and 9 of the last 10 months (November through August). This is definitely a Let the Trend Be Your Friend type of market. So how has the S&P 500 performed after the initial Fed rate cut? Well that depends on whether you are in a recession or not. Dating back to 1970, in the six months following the first reduction, the S&P 500 slumped an average of 4% if the economy was in a recession, which compares to a 14% gain when the Fed cut in a non-recessionary period. Most economists say we are in the latter, and well get more insight on Thursday when we get updated GDP numbers. For TSP TIPS it was a nice week as all three equity funds made new 52 week highs, have Composite Scores maxed out at 100, and have increasing Performance Ranking numbers. As such, we recommend no changes to our current investment mix and anticipate staying at 100% invested for much of October, unless the markets turn south dramatically. That said, we are also offering a new subscription called Mutual Fund Window (MFW) TIPS, which utilizes buy/sell recommendations for the ProFunds Ultra NASDAQ 100 (UOPIX) fund. It is tailored for aggressive investors as it uses the NASDAQ 100 as its underlying index, but it is a 2:1 ratio fund. That means that if the index goes up 1% on a daily basis, the fund gains 2%. Conversely, if the index goes down 1% on a daily basis, the fund goes down 2%. As such, this is not a buy and hold fund. For those of you not familiar with MFW, any exchange from the TSP into MFW counts as one of your 2 monthly reallocations. You will be receiving a follow-on email with more information, but if you are thinking about it, now is the time to act if you have not used both September reallocations. If you have, the first week of October would be good as we will probably only have one Performance Ranking Polishing Allocation in October. While this strategy is tailored for the TSP MFW, it could also be used on a Schwab account with a minimum transfer of $500 and no transaction fees. Hope this helps and standby for an End of Quarter/Year to Date Zoom call in mid-October.