It was a very big week for the TSP stock funds and COULD be a significant turning point… All 3 TSP stock funds were up for the week with the C fund up 2.41%, S fund 2.42%, and the I fund 1.18%. While the price moves are significant, the change in the 2 year weekly patterns is most important. All 3 weekly charts have been in consolidation since late January. This was the first week that we saw a pretty clear break in the consolidation patterns. We still need to see a HIGH VOLUME price move next week to confirm the breakout…
This week we are going to focus on the 2 year weekly charts of the 3 TSP stock funds. The weekly chart enables us to see the forest (the actual trend) without getting distracted by the trees (daily price fluctuations). While everyone wants to get into the stock funds at the exact bottom and out at the exact top, the reality is that catching the trend change early is most important. That’s the key to maximizing gains over time while minimizing downside risk.
The C fund chart below shows the 2 year trend that began back in January 2016. Trend lines are not an exact science but, they tend to work extremely well as a guide and in conjunction with other indicators, patterns and the wave count. In the consolidation that began in January, the S&P500 (C Fund) has found support at the trend line during each test. This week we saw a significant price move higher following 7 weeks of trend line testing. Ideally this price move would have come on high volume. High volume indicates buying and selling by large institutional investors. We are looking for increasing volume next week to confirm the breakout.
The S fund has been running in a pretty identifiable channel for the past 2+ years. The lower channel line has acted as a floor while the upper line acts as a ceiling. All indications are that we are headed back up to the upper channel line… * Compare the price chart to the RSI indicator below. Every time the RSI indicator hit 50 the price moved higher.*
The I fund has also been in an identifiable channel and looks poised to make a run back to the upper channel line. With the MACD, Stochastic and RSI indicators all pointed up, the I fund could see a big move higher over the next several months.
It appears that the breakout has begun but we need to see increased volume to confirm. Caveat…IF the market rolls over and closes below the trend line on the C fund, or lower channel line on the S or I funds, all bets are off!
Have a great weekend!