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!