Sunday Update: 16 December 2018

Midway thru the month and the pain continues for the TSP stock funds.  For the week the C fund was down 1.26%, S fund down 2.35%, and the I fund down fractionally at 0.48%.  Fridays loss of almost 2% on the C fund was significant in terms of both the daily and weekly charts.  We’re going to focus on the 4 year weekly chart for all 3 stock funds this week.  First we’ll get a broad perspective with the 20 year monthly chart, then finish with the 6 month daily.  

Very Long Term

The 20 year monthly chart of the C fund below tells an important story.  The tech bubble crash began in 2000 and took almost 3 years to complete for a 50% loss.  The real estate / financial system melt-down began in 2007 and took almost 2.5 yrs to complete for a 55% loss top to bottom.  Regardless of how deep the current bear market goes, it will likely be 2 to 3 years before we see the final bottom…  The lower indicator on this chart, MACD, is topped out and just rolling over on a monthly basis.  Look at the MACD levels in 2003 and 2009.   The current MACD has a LONG way to go to the downside before a significant bottom will be in place…  

The next significant area of support is the 10 year trend line at about 2400.  This is the first POTENTIAL bottom.  We’ll be watching this level closely when we get there. 

Long Term

In the 4 year weekly chart of the C fund we can see that the 200WMA is tracking pretty close to the 10 trend line in the chart above.  There will be A LOT of support at this level when we get there.  We will likely test that level as a potential bottom for most of 2019.

The S fund is closer to its 200WMA, hopefully giving us an early indication of support at that level.  If the S fund crashes thru its 200DMA, we should expect the C fund to do the same.  Based on this chart, the S fund should test its 200WMA early in 2019.

The I fund is at its 200WMA.  While the stock funds have not tracked each other precisely over the past few years, if the I fund can establish support and rally up from its 200WMA this would be a great sign for all 3 TSP stock funds.

Short Term

The 6 month daily chart of the C fund broke down thru major support on Friday.  With the MACD and Stochastic indicators turning more negative, there is nothing about this chart that would indicate a bottom is near.  (The line chart plots the Closing Daily Price only, removing daily volatility).

Bottom line  

The charts show no indication of a bottom anytime soon, on any time-frame.  Prices don’t move in a straight line and would expect volatility to continue.  Having said that, I expect we will see 2400 or lower on the S&P500 (C fund) before we see 2900 again.  

Please post question to comments or Facebook.  Have a great week!

Jerry