Volatility continues into 2019 with the 3rd weekly price advance in a row! For the week the C fund was up 2.54%, the S fund up 4.81% and the I fund up 1.87%. If you’re watching mainstream media or the business new channels, all the news has been very bad for the past couple of weeks. Analysts are fixated on the possibility of recession in 2019 or 2020, the trade deal with China is at a stalemate, and we don’t even need to talk about the government shutdown. The news would lead one to believe that the stock market should be hitting new lows! In fact, we have seen 3 explosive weeks following support at the 200WMA (Week Moving Average) of all 3 TSP stock funds. DO NOT get hung up on the “news”. Watch the trend lines, moving average lines, and technical indicators to make reallocation decisions.
This week we are going to look at the 3 year weekly and 1 year daily charts of all 3 TSP stock funds. IF you are making reallocation decisions based on the weekly charts, now is an excellent time to reallocate back to the stock funds. Prices have clearly found support at the 200WMA and the technical indicators are all moving higher with lots of room to go before getting over valued. IF you are making reallocation decisions based on the daily charts, prices are at a level where we SHOULD see resistance. If prices break thru resistance then move to stock funds. Resistance becomes support once prices break above this line. If prices roll over, buy the stock funds at a re-test of the 200WMA. ** This is NOT a recommendation. This is how I am reading the charts right now and what I’m THINKING about doing within my personal TSP account **
The C fund hit support at its 200WMA at the end of December and has turned up sharply. The next significant resistance level ON A WEEKLY BASIS is the 50WMA (blue line). The technical indicators are all moving up and show plenty of room to move higher before becoming over valued. Prices on a weekly basis are likely to move higher from here BUT, expect continued volatility on a daily basis.
The S fund had a very powerful week with all indicators moving higher. The next resistance level for the S fund is its 50WMA (blue line). On a weekly basis, the S fund is likely to move higher from here BUT, expect daily volatility.
The I fund dipped the lowest below its 200WMA but has since recovered and closed above it this week. All technical indicators are pointing to higher prices on a weekly basis. Again, expect daily volatility.
The short term perspective is a different story for all 3 TSP stock funds. As we discussed last week, we expected to see prices move up to the resistance line and the 50DMA. Prices for all 3 TSP stock funds moved into the resistance level this week. On a short term basis, it will be difficult for prices to move higher. IF they do break thru this resistance level and find support above their respective 50DMA, this is a very strong sign that the larger rally is still in place. IF they roll over, expect a re-test of the December lows. Either case is an excellent opportunity to reallocate to the stock funds.
The C fund still has some work to do to reach the resistance level and its 50DMA. A solid close above 2650 would be a great sign. Having said that, RSI is at the level of the last 2 tops, Stochastic is in the over valued range, and Wm%R is topped out. These are obstacles to prices moving higher.
The S fund is right on the resistance line and its 50DMA. It’s make or break time for the S fund! Either it breaks thru this resistance or it rolls over from here. We will know this week. Stay tuned!
The I fund has actually closed above its 50DMA and is trying to maintain that level. If it can stay above its 50DMA it would be a great sign for all 3 funds going forward. Having said that, RSI and Wm%R look to be rolling over… This will be a big week, technically, for all 3 TSP stock funds.
Next week is going to be very exciting if you’re a technical analysis nerd! All 3 TSP stock funds are at critical inflection points. Either they will break thru this significant resistance level or they will roll over. Most likely, it will be a BIG move in one direction or the other. There are still 2 and a half weeks left in January. Use your 2 moves wisely!
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Have a great week!