Alert Analysis 

3 big factors drove the market higher this morning and gave us buy signals across the board for the stock funds. The first was Consumer Price Index (CPI). Second was the drop in price of the Dollar. Third was the reversal in the 10 year yield.

CPI rose 0.20% in June vs an expected 0.30% increase. Inflation dropped from 4% to 3% month over month. This puts inflation at its lowest level in more than 2 years. The odds of a FED rate hike in July are currently 90% but, this new CPI number gives investors hope that the July hike will be the last one in this rate hiking cycle.

We've been talking about the Dollar and the I fund for months and it was a main topic of last weekend's Newsletter. With the dollar falling, the I fund is breaking out. A falling dollar is also bullish for the S and C funds but it doesn't correlate as directly as to the I fund. A solid break below the lower support line at 100.7 would be very bullish for stocks.

Yield reversed hard today after breaking out last week. This accounts for the pop in the F fund. The long term pattern is very strong so, I expect this pull back in yield to be short lived. A daily close below 3.7 would put the pattern in question.

The TSP Fund Charts

The C fund put in an a-b-c consolidation pattern from mid-June to 11 July. Within this consolidation, it found support at its 20DMA twice and gapped up this morning. The C fund is in rally mode despite a mountain of adverse data.

Today's gap up gives us a great, low risk, entry point. A close below 4390 would be a big red flag. A close below 4325 would likely mean a new down trend has begun.



The S fund gapped up through the upper resistance line. A close above 1850, the August 2022 high, would be confirmation of long term move higher. This shows an increase in breadth as more stocks are participating in the rally.



The I fund gave us a buy trigger today with a gap up through the 20DMA, RSI above 50, CCI above 0, and MACD cross. If the dollar continues lower, the I fund will continue higher.



The F fund gapped up to the 20DMA. Still no buy trigger here. We are still looking for another leg lower in the F fund before a significant up trend emerges.

Bottom Line

The C fund put in a very short consolidation over the past few weeks and its up trend resumes today. With a rate hike priced in at 90%, if the FED were to not raise on July 26th, the market would likely explode to the upside.

We've been talking about sector rotation for some time. Today's gap up in the S fund is a big step in the right direction. It shows more participation in the current rally.

The easiest play right now is the I fund. With the dollar breaking major support, the I fund is free to move significantly higher.

New Allocation: 34% C Fund, 33% S Fund, 33% I Fund

GrowMyTSP.com does NOT provide personal investment advice. The Alert and Analysis are designed for you to make your own reallocation decisions based on your personal circumstances and risk tolerance. This Alert analysis details the current allocations within the “Grow Model Portfolio”. You can follow along with these allocations or use this information to make your own reallocation decisions.