Sunday Update: 02 February 2020

An old stock market adage says, “As goes January, so goes the year”.  Let’s hope that adage doesn’t play out in 2020!  The year kicked off with with a huge 3% move higher during the first 2 weeks of January.  Since then the market has rolled over, and January closed lower than it opened…  For the week the C fund was down 2.12%, S fund down 2.13%, I fund down 2.89%, and F fund up 0.76%

We’re going to focus on the weekly charts of the stock funds and F fund this week.  We’ll also look at the short term, daily chart of the C fund.  

Short Term – 1 Year  Daily 

The C fund closed just barely below its 10DMA last Friday.  On Monday prices moved lower followed by a recovery back up to the 10DMA.  By Friday’s close, prices took out Monday’s lows and finished just above the 50DMA.  There was no reversal or sign of panic selling on Friday; this means lower prices are likely in the short term…  A daily close below 3200 is a serious problem.

Medium Term – 3 Year Weekly

On a weekly basis, the C fund closed at it’s 10WMA (week moving average).  It looks like this close was coincidental and NOT because of support at the 10WMA.  If this line does not hold, the next resistance level is the 50WMA and prior high at the 3000 area.  Unfortunately, the look like that’s where we’re headed… 

The S fund made a new all-time high, breaking above 1500 in late December 2019.  The price got as high as 1560 intraday before rolling over during the past two weeks.  By the close this Friday, the S fund was testing 1500 and its 10WMA.  The 1500 area should act as support here but, the technical indicators are calling for lower prices ahead…  

The I fund began January with a high just below its prior high from January 2018.  Since then it has close down on big volume, significantly below its 10WMA.  Its going to be tough for the I fund to find support before hitting its 50WMA at 65…

And Now For The Good News…  

The F fund broke out to the upside 2 weeks ago with a weekly close above 113.  Coming off of a 4 month consolidation, the F fund still has room to move higher.  As its 10WMA continues to trend higher, we should expect a consolidation to the 10WMA in the near term…  

Bottom Line: Market risk is very high right now.  All three of the stock funds are below their respective 10WMA.  The C fund is just above its 50DMA, S fund is right on its 50DMA, and the I fund has tested and rolled over at its 50DMA.  The stock funds are not where you want your dollars to be allocated.  The F fund has had a good run and could definitely continue higher, but there is some risk.  The alternative to the F fund is the absolute risk free G fund.  

Next week could be very exciting (volatile).. Be on the lookout for panic selling.  This could coincide with a near term bottom…

Have a great week!

Jerry