Sunday Update: 13 October 2019

Friday capped a strong week for the TSP stock funds.  All 3 funds are now at or above their 50 and 200 Day Moving Average (DMA).  For the week the C fund was up 0.62%, the S fund up 0.61%, and the I fund up 2.15%.  As we have discussed in past Sunday Updates, it’s critical to understand where we are over multiple time frames.  This week we’ll look at all 3 TSP stock fund charts on both a daily and weekly basis. 

C Fund

The 2 year weekly chart of the C fund shows a 6 month consolidation that began at the end of April 2019.  The C fund had come off the lows from December 2018 and recovered back to the prior high of 2950.  The consolidation began at that level and has oscillated around 2950 forming a bullish triangle pattern.  The past 2 weekly reversals at the short-term trend line are very positive.  A weekly close below the short-term trend line would be a serious red flag.

The daily chart gives us a different perspective.  The 3 corrections since the late April top found support at or above the 200DMA.  In addition, each low was higher than the previous low; a bullish sign that creates the lower line of the triangle. Friday’s gap up thru the 50DMA COULD be the beginning of a new rally in stocks.  A close above 3025 would confirm.  We do not want to see a daily close below the 50DMA at this point.  A daily close below 2825 voids the triangle and changes the pattern completely.

S Fund

The S fund consolidation began in late February 2019 and has taken on a different shape.  Most significantly, the S fund has not yet exceeded its 2018 high.  Like the C fund, the S fund has shown weekly reversals over the past 2 weeks.  This is a positive sign.  A weekly close below 1325 would be a serious red flag.

The daily chart show us the long term horizontal consolidation of the S fund over the past 7 months.  This has been a relatively volatile consolidation with a range of 10% from top to bottom.  Friday’s gap up thru the 50 and 200DMA is an encouraging sign but, the late day reversal gives us reason to watch closely.  We want to see support hold at 1375.  A daily close below 1325 is a serious problem.

The S and I fund weekly charts are similar.  Both are significantly below their 2018 highs and both are forming a relatively horizontal consolidation pattern.  The I fund also had a strong week, finding support at its 50WMA and closing up over 2% for the week.  A weekly close above the late June high (~ 67) would be very bullish.  A weekly close below the 50WMA would be a serious red flag. 

The I fund had a huge gap up on Friday following weekly support at the 200DMA.  You can see the diamond pattern pretty clearly in the daily chart below.  Friday’s gap up COULD be the beginning of a new rally for the I fund.  A close above 67 would confirm.  A close below 62 is a serious red flag.

Bottom Line: The weekly charts show prices on all 3 TSP stock funds firmly in the center of their respective consolidation patterns.  The daily charts, however, show some strong price movement after support at technically favorable levels.  The risk/reward ratio is improving.  

Have a great weekend!

Jerry