Sunday Update: 04 March 2018

March Madness started early and I don’t mean Basketball..  What a crazy week for the TSP stock funds!  

The short term ups and downs are way too volatile to be useful in making long term TSP decisions.  This weekend’s Sunday Update is going to focus on 3 charts; 10 year, 2 year, and 6 months on the S&P500 (C Fund).  These 3 charts give us the basic possibilities going forward for the foreseeable future…

Very Long Term

The 10 year chart below gives us probably the worst case scenario over the next several years.  If the market continues down and breaks below the short term trend line, then we are likely headed to the long term trend line.  If the long term line is broken, we could see prices as low as 1400…  Not a prediction, just the low end limit.  The short term trend line is KEY and we dig into that on the next chart!

Long Term

The 2 year weekly chart below is our best case scenario, and most likely in my opinion…  A weekly close below this trend line would be a problem but, as long as we stay above and get a strong breakout to the upside, I think we will see higher highs in 2018.

Short Term

The short term chart shows the important areas of support and resistance.  The 200DMA and the trend line in the chart above are virtually intersecting right now.  There is a lot of support in this area, roughly 2575-2600 as the price moves lower.  If we get support there followed by a strong break to the upside, then it’s back to the races… It may take a couple of weeks but, I think we will see prices test the 200DMA before making another run higher.  It’s just too volatile right now and there are too many possibilities in the short term to make TSP decisions.

These crazy market swings can really throw you for a loop.  The “conventional wisdom” is to leave your money in the stock funds and let it ride…  That was great in 2017 but, how has it made you feel over the past 6 weeks??  If you don’t like seeing giant fluctuations in your account week to week, you need to manage the risk.  

Volatility is not going away anytime soon.  Hold on for the ride!

Have a great week.

Jerry