Sunday Update: 09 February 2020

Despite Friday’s pull back, it was a very productive week for the TSP stock funds.  For the week the C fund was up 3.17%, S fund up 2.50%, I fund up 2.19%, and F fund down 0.16%.  

In this post we will look at the C fund from a monthly, weekly and daily perspective beginning as far back as the last major low in 2009.  We are at a critical short term juncture.  Having a perspective from 3 different time frames will help in anticipating just how high this market can go…

Very Long Term

The 12 year monthly chart of the C fund below shows the longest expansion in U.S. history playing out in 5 primary waves.  Since each red of white rectangle on the chart represents 1 month of price movement, this time-frame is too broad to be used in making reallocation decisions.  This time-frame is excellent for giving us the big picture wave count.  

Long Term

The 18 month weekly chart of the C fund below drills down to a weekly view of wave V which began at the low in December 2018.  After finding support at its 200WMA (Week Moving Average), the C fund rallied strongly and has progressed in an expanding 5 wave pattern.  IF this wave count is correct, the C fund should move significantly higher over the next several months.  A weekly close below the 10WMA would call the wave count into question.  IF this count is not correct, the C fund should begin a major correction within the next few weeks.  Wave I, from early 2009 to mid-2010, took 14 months to complete.  Wave V is currently in its 14th month.  Wave I and V are often (but not always) roughly equivalent in price movement and time duration….  Watch the 3200 level closely!

Short Term

The short term, daily chart looks very strong.  The S&P500 (C Fund) hit a new all-time high on Thursday before giving some of those gains back on Friday.  If the market continues lower this week, we would like to see support at the 10DMA or 50DMA at worst case.  A daily close below 3200 would be a serious problem for the rally.

Bottom Line:  The market could move significantly higher from here.  Wave V looks to be tracing out in 5 expanding legs.  If this is the case, we will see the market move significantly higher.  On the other hand, wave V has unique characteristics.  There is no requirement that wave V expands in 5 legs, only that the end price of wave V is greater than the top of wave III.  That has already happened.  We need to be prepared for both possibilities for the next couple of months.

Have a great week!

Jerry