* Alert * : 06 January 2021
I was having flashbacks to the 2016 election this morning! Election night 2016, the futures market was down 1,000 points after President Trump won. By the open the next morning, the market had swung to 1,000 to the plus side. The reason? Your guess is as good as mine… We had something like that today, though on a much smaller scale. The C fund fell about 0.50% at the open and then immediately reversed course. By 11:00 the C fund was up 1.7%! The S fund was up over 3% around mid day, and the I fund was up 1.4% at the daily high. This was an across the board breakout… The late day reversal did not help but, all 3 TSP stock funds closed above their respective 10DMA lines.
From a medium term perspective, the C fund has progressed along a well established Elliott Wave pattern since the low in March 2020. Leg I included 5 sub-legs. Leg II included the a-b-c correction. We are now in the early stages of Leg III. IF this count proves to be correct, the market will move significantly higher from here over the next few months.
The C fund found support at its 10DMA and hit a new all-time high before reversing half of the day’s gains. Volume was not as heavy as yesterday’s down day but, still very respectable. The price gap between the 10DMA and the 50DMA is decreasing. This decreases our downside risk exposure before the next major support level.
The S fund completed a little a-b-c correction on Monday and staged a very strong breakout today. While the S fund had been up over 3% at the high, a 2+% move and a close above the 10DMA puts the S fund back in the game!
The I fund is outperforming this week vs the C and S funds. The I fund has clearly found support at its 10DMA and has hit a new all-time high today. With the indicators now positive, the I fund is looking very strong.
Bottom Line: As long as the TSP stock funds are above their respective 10DMA lines, we want to be fully invested in the stock funds. The charts look strong and indicators are turning positive. There is no reason to be in the G or F funds at this point in the cycle.
Have a great week!
Awesome thank you
I was unable to follow last two alerts due to travel so I’m in G. If the expectation is that funds will continue to perform at even higher levels for the next few months, would you reallocate from G now rather than wait until C is below the 10 DMA?
If it was me, I would still reallocate from G to the stock funds. That’s based on my personal risk tolerance and life circumstances. The further price is from the 10DMA, the more risk there is in reallocating. There’s risk either way…
Jerry, Thanks for what you do and I appreciate the “Live Charts”. I had tried to find that type of chart after one of the Sunday pod cast, yet was not having much luck. I am intrigued by the 10 DMA and the additional analysis that you provide. I will give you all credit for up days and no blame for the down days as I try and follow along 🙂
Ha! Thanks Ron. The live charts is a great additional feature. Koifin is the only company we’ve found that allows linking live charts to our site. It should be useful for anyone who is watching the market pretty closely.
The market goes up and down… Our job is to respond to it. 🙂