Sunday Update: 14 April 2019
Friday capped another strong week for the TSP stock funds. For the week the C fund was up 0.51%, S fund up 0.63%, I fund up 0.29%, and the F fund down 0.11%.
Last week we began with a look at the long term C fund chart. This week we’ll take a different view. The 12 year Monthly C fund chart with the 10 Month Moving Average (MMA) gives us similar but different perspective to last week. Next will be a long term look at the F fund. This isn’t about the F fund per say. It’s really using the F fund chart to demonstrate what a great Breakout from a long term consolidation looks like. Finally, we’ll look at the short term C,S, and I fund charts.
The C fund 12 year monthly chart below gives us a good long term perspective. We seem to be just emerging from the 3rd period of long term consolidation since the 2009 low. A weekly close above the October 2018 high will give us the all clear sign that we are out of the consolidation period that began at the end of 2017. That will be very Bullish for stocks going forward in the long term. The short term is a different matter. The C fund currently sits about 4.5% above its 10 month moving average and is in its 4th consecutive month of higher prices. At some point we will need to see a short term pull back, possibly to the 10MMA. This would actually be a very healthy thing for this market. It would generate fuel for breaking to new highs as long as we don’t get a monthly close below the 10MMA.
What does a great breakout look like? The 15 year weekly chart of the F fund below is a great example of a strong price breakout from a long term consolidation, supported by VERY big volume. The F fund formed a relatively flat consolidation channel from the middle of 2016 thru January 2019. The move off of the lower channel line in late 2018 was accompanied by very big volume. This level of volume continued into 2019 as the F fund broke out of the consolidation. In the long term, that breakout point (about 106) was a great time to buy into the F fund.
From both a technical analysis and market euphoria perspective, new all-time highs are very important. The prior high is always the last place of possible resistance and the last question mark in the minds of investors. All 3 of the major US indexes (Dow Jones Industrial Average, Nasdaq, and the S&P500) are within a couple percent of their all-time highs! Breaking thru these levels should bring significantly more investment into US equities which is great if you’re in the TSP stock funds. Having said that, we SHOULD see some type of consolidation before a serious break to new all-time highs. This could come in the form of a flat consolidation hovering around the 2900-2950 level, or as a sharper correction down as low as 2700. Some type of consolidation would be very healthy for this market that has gone almost straight up since the December 2018 low. With that as the back drop, all 3 TSP stock funds keep charging higher.
The C fund gave us a short, flat consolidation this week and gapped up Friday on big volume. The technical indicators look very strong. I would expect the C fund to either begin its consolidation next week OR push up and test the 2018 highs.
The S fund had a nice consolidation from mid-February thru early April. This week solidified the breakout on the S fund. It’s now in a strong position to make a run up to its 2018 highs of 1500.
The I fund chart is very strong with prices continuing upward in its channel. A correction in the I fund could take the price down to the 50DMA (about 65), which would likely be a great buying opportunity.
Bottom Line: We are looking good, both in the long and short term. I would like to see some type of consolidation, lasting several weeks, before making a run to new all-time highs. This would strengthen the next move higher and take away all doubt of a double top scenario. Until we get a weekly all-time high closing price, there is still risk…
Have a great week!