This Alert should come as no surprise given last Monday’s Alert explanation.
Most importantly, all 3 TSP stock funds gapped up at the open this morning and are currently above either their 50DMA or 10DMA. We did very well last week avoiding losses in the stock funds and making gains in the G and F funds. We were also in a great tactical position to reallocate into the stock funds again if the market presented the opportunity. Today the markets are giving us that opportunity.
While the Seasonal Headwinds are absolutely a concern, PRICE is ALWAYS the most important driver. There are no guarantees that price will move higher from here but, this morning’s price action indicates at least a short term rally.
The C fund found support at its 50MDA late last week and is now back above its 10DMA. We have seen this pattern throughout 2021. WHEN the C fund closes below its 50DMA AND cannot make a new high on the recovery rally, then a trend change is in place. Until then, the market pushes higher…
The S fund recovered on Friday after 2 weeks of sustained losses. With today’s gap up and (hopefully) a close above its 10DMA, we should see price move higher. A close above 2260 sometime over the next week or two would be a very good sign!
Like the S fund, the I fund recovered from a week’s worth of losses on Friday. Today’s gap up and close above the 50DMA is very promising. A close above the 81.5 high would be very bullish.
The F fund is still in good shape. As long as the F fund remains above its 10DMA, there is no reason to sell. Having said that, the stock funds give us the biggest bang for the buck! We want to be in the stock funds when the market is moving higher. Based on this chart, the F fund is still in a great pattern to continue higher. It just doesn’t give us as good a rate of return as the stock funds do when they are moving higher.
Last Monday’s intra-day breakdown in the S fund clearly signaled a short term correction in the stock funds as a whole. The C fund corrected down to its 50DMA and found support, as it has for all of 2021. As of this morning, this short term correction has been resolved. There is currently no reason, based on chart analysis, to be out of the stock funds.
As we explained in this weekend’s Weekly Update Newsletter, we are anticipating a correction. The timing of this correction is anyone’s guess, we just need to be prepared when it comes.
Have a great week!