While all three TSP stock funds closed down for the week, things could have been a lot worse…  The S&P500 (C fund) dipped down to 2630 on Thursday before reversing to close higher.  Friday’s follow up pushed the C fund within striking range of its 200DMA. For the week the C fund was down 1.61%, the S fund down 1.32%, and the I fund down 0.71%.  The MOST LIKELY Elliott Wave count calls for higher prices over the next few weeks.  Prices could get above the 50DMA before rolling over for the next down leg.  We’ll be watching this very closely…

Not much has changed this week with respect to the Elliott Wave pattern.  It would be helpful to review last week’s Sunday Update and compare to this week.  We’re still on track with the wave count as described last week.  Right now the market is not in a tradable pattern for TSP investors.  Because of the “2 moves per calendar month rule”, the current trading range does not allow us to reasonably take advantage of the volatility in the market.  For our purposes the 2 price points that matter on the S&P500 are 2940, the September 2018 high, and 2540, the February 2018 low.  A close above this high, within the next several months, would confirm the bull rally since 2009 is still in place.  A close below this low would confirm a major bear market is underway. 

With that as a backdrop, let’s get a 30,000’ view by focusing on the 10 year monthly TSP charts.

C Fund 10 Year Monthly

In addition to moving average lines, Trend Lines are a valuable tool for anticipating price reversals. The price chart found support at the 2 year trend line at each test since early 2016 with October’s closing price right on the line.  November is a critical month.  If we can close out November above the 2 year trend line, there is still a chance that the rally stays in place.  A November close below this line would be a very bad sign.  The next trend line support is the 10 year at about 2400, or 13% lower…

S Fund 10 Year Monthly

The 10 year monthly chart of the S fund is similar to the C fund chart, only worse.  The most important difference is that the S fund closed definitively below the 2 year trend line in October.  The S fund has a lot of work to do to get back above the 2 year trend line, and it’s not looking good…  The next trend line support is the 10 year line at about 1175, or 12% lower. 

I Fund 10 Year Monthly

In some respects, the I fund is the best looking chart right now.  It’s approaching the lower limit of its 10 year channel and the Wm%R indicator has hit a near term bottom.  Each time the I fund price has hit the lower channel line in the past 10 years, it has recovered higher.  Each time the Wm%R indicator hit the 75 line, it was an early indicator of a bottom in price. IF the I fund can hit the lower channel line and reverse up, it would be a great time to buy.  Watch this one carefully!

Short term volatility will absolutely continue.  Don’t let this rattle you!  Pay attention to the longer term, weekly/monthly charts.  This will help you see the forest thru the trees…

Have a great week!

Jerry