Sunday Update: 05 February 2017

Current Allocations 34% C Fund, 33% S Fund, 33% I Fund.

A mere 2 weeks into the new administration and we have seen some fast and furious changes coming out of the White House.  I, like most people, am getting tired of my FaceBook feed being full of pontifications from the far left, the far right, and everything in between.  We have seen an array of sweeping executive orders, nation wide protests, federal judicial action, and all kinds of hand wringing…  Depending on which side of the fence you stand politically, you might have expected to see your TSP account skyrocket or crash.  Conventional wisdom would have you believe that such a significant amount of political turmoil and civil unrest would have an obvious effect on the TSP funds.  This is a great example of why “Conventional Wisdom” is rarely correct in predicting movement in the stock market.  The market moves in cycles that can be seen thru identifiable patterns in the price chart.  The best way make decisions about moving your money between the TSP funds is to watch the patterns form in the price chart, supported by the technical indictors, and try to tune out the pundits…

Short Term

The market broke out of a flat consolidation on 25 January.  Over the past 2 weeks the market has rolled over to find support in the consolidation area and broke out again on Friday.  We want to see the S&P500 (C Fund) close above 2300 to confirm the 25 January breakout.  The short term chart below is pretty strong.  I expect we will see prices continue higher over the next couple of weeks as we approach the 2500 target area.  (Until we close above 2300, there is still a chance of being pulled back into the consolidation range)

Long Term

The 2 year weekly charts of the C and S funds below are very similar.  They both show prices moving steadily higher on a weekly basis within the channel.  Both price charts are approaching the top of the channel with the technical indicators getting over bought but continuing higher.  It will be very tough for prices to continue beyond the upper channel line without a correction.  I will be watching the volume and technical indicators closely as we approach the upper channel line and the 2500 price target area for the C fund.

The I Fund has had a great run for the past 3 months, without the consolidation we saw on the C and S funds.  The I fund still has room to move higher within it’s channel as it approaches the prior high of 65.  The technical indicators also support prices continuing higher.  Having said that, 11 weeks is a pretty long run without a break and we are higher than the most recent high at 59.  We could see a pull back or consolidation within the next week or 2 before a run up to the top of the channel.  The technical indicators will be key for all 3 TSP stock funds over the next several weeks.

Please post questions to comments and have a great week!

Jerry