Current Allocation: 100% G Fund
It was a very big week for the TSP stock funds! Both the C and S funds pushed higher while the I fund has been consolidating for the past few weeks. In the short run, the S&P500 (C fund) ended the week right at the upper channel line (see the chart below). This SHOULD cause some resistance over the next week or so… The long term charts look very strong with room to move higher within their respective channel lines.
We are approaching a long term top; there is little doubt about that. I am still looking for a substantial correction, at least down to the 50DMA, before we get a final push higher into 2018. While the past few weeks have been very strong, I am not willing to chase this market. My plan is to get back into the stock funds, as close to the bottom of the next correction as possible, and ride the next move higher into 2018. As we get closer to the top we should expect some significant price moves, possibly in both directions, while the Bulls and Bears fight it out. The next couple of months will likely be very exciting…
The short term chart below shows the S&P500 (C fund) chart maxed out both in terms of price and the technical indicators. The price chart ran right up to the upper channel line before finding resistance on Friday. The MACD and RSI are extremely over bought versus the highs of the last 6 months. We are certainly due for a pull back…
The long term charts tell a much different story from the short term chart. Where the short term price chart is at the top of the trading channel, the long term charts still have room to move up. Also importantly, the MACD and Stochastic have turned positive on the long term charts of the C and S funds. This is significant. The last time these lines crossed positively was February 2016 and November 2016; both the beginnings of significant moves up in price.
Bottom line is, the long term trend has broken out and prices are LIKELY to move higher. In the short term, prices are over bought and likely to move lower. It’s all about tactics at this point to find a good day to buy into the stock funds.
While we are certainly headed for a major top, likely sometime in 2018, the market could move much higher before we get there. With this as a backdrop, right now I am looking for a good time to get into the TSP stock funds. I’m watching the short term chart closely. When it shows signs of bottoming out, expect an ALERT.
Have a great week!