The S&P 500 is now down four weeks in a row as it closed Friday at 5,638.94. Tariff uncertainty again strongly influenced the direction of the markets the entire week. On Monday the S&P 500 had a loss of 2.70%, its worst since 18 December 2024. It also closed below its 200 day Moving Average (MA) for the first time since November 2023, snapping a streak of 336 sessions above that threshold. Tuesday saw a continued sell off with the S&P 500 closing below 5,600 for the first time since 12 September 2024. Before Wednesdays open, the February Consumer Price Index (CPI) came in at 0.2%, down from Januarys 0.5%. The S&P 500 had a positive day, but trade talks still loomed over the markets. On Thursday we got the second inflation number, that being the monthly Producer Price Index (PPI). February PPI was unchanged, below forecasts of 0.3%, and at its lowest rate in seven months. However, it didnt matter. Tariffs again took the spotlight with the S&P 500 having a daily loss of greater than 1%, closing at 5,521, down 10.1% from its 19 February record close of 6,144, and bringing it officially into correction territory. That all changed on Friday as tariff talks faded to the background, and the S&P 500 made it a bookend week with a second daily move of over 2%. However, this one was positive, in the opposite direction of Mondays loss. From a technical perspective, Fridays gain was significant from an oversold condition. For charting, we utilize Heiken Ashi (HA) candles for daily trend analysis. On 20 February, the HA bar turned from green to red, or bearish. Over the next sixteen days it remained red. However, on Friday it broke that string and turned back to green, or bullish. This week weve also seen the VIX, a Volatility Index, reverse off a high volatility number, giving us a second bullish signal. So, next week brings us the Fed meeting on Wednesday, and there is a strong likelihood they hold steady on fed rates. For TSP TIPS the International fund remains at the top of the Composite Score (100 CS) and Performance Rankings (PR) leaderboards, far outdistancing the C and S funds (both 15 CS). As such, we recommend no changes to our current investment mix. Which then gives us the following opportunity. Given this disparity between the three TSP equity funds (I/C/S), this might be a good time to revisit our Mutual Fund Window (MFW) TIPS. It focuses on the ProFunds Ultra NASDAQ 100 (UOPIX) and Bitcoin (BTCFX) funds, and we are currently 100% in cash. When you establish your MFW from the TSP, it counts towards one of your two monthly reallocations. However, that disparity between the I, C and S funds is also true between the I fund and UOPIX and BTCFX. So, the scenario works like this. First, make the transfer from your TSP to your MFW for the second investment mix reallocation in March. That said, since the I fund has been so strong and is the majority holding in the TSP TIPS models, we probably will not see another March reallocation. However, if the market does sell off, we can also use our third TSP investment mix to increase cash in the TSP. Meanwhile, the MFW funds will remain in cash since the sell off will probably not trigger a buy in MFW TIPS for UOPIX and BTCFX. Just something to consider and have a Happy St. Patricks Day!!
The S&P 500 is now down four weeks in a row as it closed Friday at 5,638.94. Tariff uncertainty again strongly influenced the direction of the markets the entire week. On Monday the S&P 500 had a loss of 2.70%, its worst since 18 December 2024. It also closed below its 200 day Moving Average (MA) for the first time since November 2023, snapping a streak of 336 sessions above that threshold. Tuesday saw a continued sell off with the S&P 500 closing below 5,600 for the first time since 12 September 2024. Before Wednesdays open, the February Consumer Price Index (CPI) came in at 0.2%, down from Januarys 0.5%. The S&P 500 had a positive day, but trade talks still loomed over the markets. On Thursday we got the second inflation number, that being the monthly Producer Price Index (PPI). February PPI was unchanged, below forecasts of 0.3%, and at its lowest rate in seven months. However, it didnt matter. Tariffs again took the spotlight with the S&P 500 having a daily loss of greater than 1%, closing at 5,521, down 10.1% from its 19 February record close of 6,144, and bringing it officially into correction territory. That all changed on Friday as tariff talks faded to the background, and the S&P 500 made it a bookend week with a second daily move of over 2%. However, this one was positive, in the opposite direction of Mondays loss. From a technical perspective, Fridays gain was significant from an oversold condition. For charting, we utilize Heiken Ashi (HA) candles for daily trend analysis. On 20 February, the HA bar turned from green to red, or bearish. Over the next sixteen days it remained red. However, on Friday it broke that string and turned back to green, or bullish. This week weve also seen the VIX, a Volatility Index, reverse off a high volatility number, giving us a second bullish signal. So, next week brings us the Fed meeting on Wednesday, and there is a strong likelihood they hold steady on fed rates. For TSP TIPS the International fund remains at the top of the Composite Score (100 CS) and Performance Rankings (PR) leaderboards, far outdistancing the C and S funds (both 15 CS). As such, we recommend no changes to our current investment mix. Which then gives us the following opportunity. Given this disparity between the three TSP equity funds (I/C/S), this might be a good time to revisit our Mutual Fund Window (MFW) TIPS. It focuses on the ProFunds Ultra NASDAQ 100 (UOPIX) and Bitcoin (BTCFX) funds, and we are currently 100% in cash. When you establish your MFW from the TSP, it counts towards one of your two monthly reallocations. However, that disparity between the I, C and S funds is also true between the I fund and UOPIX and BTCFX. So, the scenario works like this. First, make the transfer from your TSP to your MFW for the second investment mix reallocation in March. That said, since the I fund has been so strong and is the majority holding in the TSP TIPS models, we probably will not see another March reallocation. However, if the market does sell off, we can also use our third TSP investment mix to increase cash in the TSP. Meanwhile, the MFW funds will remain in cash since the sell off will probably not trigger a buy in MFW TIPS for UOPIX and BTCFX. Just something to consider and have a Happy St. Patricks Day!!