Sunday Update: 17 July 2016

Sunday Update: 25% C Fund / 25% S Fund / 50% G Fund Until Further Notice.

Short Term

It was a great week for the stock funds!  All 3 funds made gains for the week with the C fund hitting record highs.  We have come a long way, without a pause, since the lows following Brexit.  We are definitely overbought in the short term but the long term is looking really good from here.  I am expecting to see some consolidation next week as the market digests the big moves from the past few weeks.  Ideally the S&P will stay above the 2100 level and consolidate on low volume.


Long Term

Since we are 50% invested in the stock funds, and the long term charts look great, we want to look for a good opportunity to increase our current stock allocation.  I am looking to get fully invested in the stock funds on the next follow thru day after consolidation.  Ideally, this will include the I fund.  If the I fund can break thru its 50WMA it could lead the way forward as the double bottom is a strong pattern (see I fund chart below).




Very Long Term View

Elliott Wave Patterns help to identify where we are in market cycles.  The pattern includes 3 steps up and 2 steps down (side ways) for a total of 5 steps.  There are very specific rules for counting and the patterns are open to interpretation but, over a long time period, Elliott Wave can be very effective as a predictive tool.  The chart below is a 10 year weekly chart of the S&P500 (C fund).  I have marked the general steps within the long term channel lines, beginning from the low in 2009.  IF the pattern continues and IF my count is correct, we may have just begun a rally that could take us up to 2500 or higher by mid-2017.


Please post questions to comments and SHARE.  Have a great week!



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  1. I think that it is extremely difficult to forecast out the global stock market direction multiple years from now because as soon as the probability of an economic recession becomes real, we could definitely see a steep sell off. As long as the odds of recession remain low, and inflation remains below target, then we remain in a low interest rate environment with high valuation pumped up and capable of climbing even higher as you said. What I feel I have more long-term control over is this. In allocating TSP risk, how much to put in C Fund, vs S Fund, vs I Fund. As these all are market-sensitive, there are long time periods where one outperforms the other. Seeing I Fund is the only one not richly overvalued, given a bad outlook or a good one, I feel the I Fund will have less to lose in the event of recession and more to gain if all goes well and earnings pick up and central banks keep a relatively low rate environment for a long time.