Sunday Update: 40% C Fund / 40% S Fund / 20% I Fund

It was a strong week, technically, for the S&P500 (C fund).  The market had been consolidating at the 2160 level for about a month.  On Tuesday of this week, the S&P dropped below 2150 during the trading day but closed at almost 2160.  This one day spike down is very common in sideways consolidations and cleared the way for Friday’s break out above 2180 and new, all time highs.  August can be a volatile month and there are lots of political and economic unknowns out there but, in my opinion, the upside potential of being in the stock funds out weighs the downside risk.

The short term chart below looks very strong.  The price chart cleared the 2180 ceiling and all technical indicators are pointing up.

20160807Cfund6MonthsDaily

Long Term

The long term charts aren’t as strong.  They indicate a very top heavy market so we still need to be careful going forward.  The trend is not so firmly in place that we can set and forget our TSP allocations.  If all goes well, the long term charts will strengthen over the next few months and confirm the rally we’re seeing in the short term chart.

20160807Cfund2yrWeekly

20160807Sfund2yrWeekly

20160807Ifund2yrWeekly

We really want to see 2 things happen over the next few weeks.  First, the we want to see the S fund close above 95 on the weekly chart.  This will put us at new highs and confirm the rally we are seeing in the C fund.  Second, we want to see the I fund break thru, and stay above, its 50 WMA.  This would also be a great confirmation of the current rally.

August, September and October can be EXTREMELY volatile months for the stock market.  Add in this insane election season and you never know what might happen in the markets.  Have a great week and please share!

Jerry