In the Weekly Update Newsletter this past weekend, we discussed the sell triggers for both the C and S funds. Both of those triggers were met today.

The C fund opened below its 10DMA, and tested the prior lows of mid-April, before reversing to close down 0.67%. With volume relatively high on today’s down day and another 4% down to support at the 50DMA, market risk turned significantly higher today for the C fund. I was not not allocated in the C fund prior to this Alert but, I track the C fund as the primary directional indicator for the TSP funds as a whole. Today’s breakdown could be short term profit taking but, the technical indicators appear to be anticipating continued price decline. IF price recovers, getting back into the C fund above 4225 would represent an opportunity cost of 1.5% vs a downside risk of 4% to expected support at the 50DMA.

The S fund gapped down below its 10DMA at the open and spent much of the day below its 50DMA. A late day reversal brought the price back above the 50DMA. If price does not find support here, the next support level is the lower trend line at 2050. A close above the prior double top at 2250 would confirm a continued up trend for the S fund.

The F fund has shown several days of strong volume following support at its 50MDA line. As we discussed in the Weekly Update Newsletter, the F fund may be a good place to make some gains while the stock funds correct or reconfirm their up trend.

Bottom Line:

I am not completely giving up on this rally but, the market risk took a big turn for the worse today. Since we are going into a seasonally difficult period and we are still relatively close to all-time highs, now is a great time to sit on the sidelines and wait for the market to decide its next direction. From a tactical perspective, we entered May fully invested in the S fund. We can still reallocate back into the stock funds and out again if necessary. Expect some big intra-day price volatility as we continue thru May.

Jerry