It was a volatile week for TSP investors to cap the biggest monthly gains since 1987!  For the week the C fund was down 0.21%, S fund up 2.01%, I fund up 0.24% and F fund down 0.22%.  This weekend we’re going to look at all 3 time frames (Monthly, Weekly, and Daily).  The goal is to see the forest AND the trees… 

Long Term

April was HUGE for investors in the stock funds!  For the month, the C fund was up 12.81%!  It was an extremely strong move that recovered about 62% of the losses sustained since the February highs.  The big questions is, what does such a strong monthly move mean?  Let’s get some perspective…

The chart of the S&P500 (C Fund) below shows the monthly price moves from the 2009 market low to present.  The chart is logarithmic so you can see the move on a percentage basis over time.  No doubt it was a huge move but, look at 2009 vs 2020 in the chart.  2009 was a Classic Bottom with numerous big volume down months and technical indicators extremely over sold.  Contrast that with 2020 with only one big volume down month and technical indicators nowhere near over sold levels.  Watch for the technical indicators to get oversold, on a monthly basis, before this bear market is really over…  

    

Medium Term

While April was a great month, May 1st was a serious shot across the bow…  All of the price gains going back to 14 April were wiped out on Friday.  This shows up in the chart as a weekly reversal off of the 62% retracement level.  A weekly reversal is a Bearish sign.  It does NOT mean that prices will crash lower from here but, it does mean that market risk is very high.  

The S fund also had a giant weekly reversal.  It was not able fill the gap but still hit the lower bounds of some serious resistance.  1300 – 1450 is going to be tough for the S fund to get through any time soon…

After the collapse in February to form the long term Double Top, the I fund has hit some serious resistance at its prior low of December 2018.  The I fund had a nice move since late March but, getting back above 58 will be tough for a while…

Short Term

Weekly reversal patterns in all 3 charts above show that we have hit some serious resistance.  The daily chart below gives us trading signals.  Remember, the goal is NOT to time the tops/bottoms.  The goal is to maximize gains while managing downside risk.  As you can clearly see in the chart below, you want to be in the stock funds when the price is above the 10DMA and out of the stock funds when the price is below the 10DMA…  

Bottom Line:  There is an old adage on Wall Street that says, “Sell in May and go away!”  Based on the first trading day in May, this could be sound advice in 2020.  We shall see…

Have a great week!

Jerry