It was another roller coaster week for the TSP stock funds. Friday’s big recovery rally enabled the market to close the week with just mild losses. For the week the C fund was down 1.03%, S fund down 1.53%, and the I fund down 1.10%.
Last week we looked at Support/Resistance at Moving Average Lines using the 3 year weekly charts. This week were going to broaden the aperture. We’ll look at long term Support/Resistance at Trend Lines using the 12 year Monthly chart of the S&P500 (C fund).
The C fund chart below shows the long term trend line that began at the low in 2009. Since that time, each time prices have fallen to that level, they have found support at the trend line. This is a long term trend line and MUST be respected. As the pattern continues to play out, we should expect some support at the moving average line before continuing lower to point e.
(The arrows in the chart below are DIRECTIONAL only! They do NOT take into account timing. It’s entirely possible that a market bottom at point e could coincide with the 2020 election or some other major event in 2020.)
In terms of the weekly patterns, the C fund is still holding up stronger than the S and I funds. The C fund has approached its 50WMA and recovered for the past 2 weeks; a bullish sign. We want to see the C fund stay above its 50WMA. A weekly close below this level would be a serious problem.
The S fund is at a make or break point. Prices have fallen below the 50WMA over the past 2 weeks but recovered each time. As of the close on Friday, the S fund is sitting just above its 50WMA. Unfortunately, I do not expect this level to hold. There is significant downward pressure, the technical indicators have rolled over the the 50WMA is on the decline.
The I fund is the worst chart of the three stock funds. The I fund closed the week below its 50WMA, although not at the lows for the week. Technical indicators do not look good. The next level of possible support is the 200WMA.
Bottom Line: There is very little near term optimism in these charts. It appears that we are slowly moving toward an eventual bottom at point e. While a move to point e represents a serious decline in prices, at that point the 4th leg will be complete and the 5th leg will take us to new all-time highs…