There was some volatility but the week ended mostly flat for the TSP stock funds.  The C fund was up 0.59%, S fund up 0.25% and I fund down 0.54%.  If you compare this week’s charts to last week you can see the evolution of the pattern development, especially in the S fund.  The S fund came down to the lower support line and reversed back up to resistance.  The C fund also found support at its resistance level of 2800.  The I fund is a different story entirely.  The I fund is on it’s last legs.  It either reverses from this level or it goes much lower.

Before we get into the short term charts, I want to compare the long term I Fund chart with the NASDAQ Composite chart and the C fund chart.  All 3 have been progressing in similar, identifiable steps since the low in 2016.  At this point they are starting to diverge i.e. go in different directions.  This is significant so we’re going to compare/contrast.

Long Term

The NASDAQ, basically IT and Tech, have lead the market higher since the February lows.  The NASDAQ is significantly above it’s 3 step level and, for the past 6 weeks, has been trying to establish support at the 7750 level.  It’s either consolidating here for a push higher or forming a topping pattern, one or the other.  The technical indicators do not look to support a push higher but it is possible.  The NASDAQ COULD be completing its 5 step at this price level.  IF the NASDAQ rolls over from here, the C and S funds will go along for the ride.  The I fund is already headed down…

In contrast to the NASDAQ, the I fund has broken down below its step 4.  This is not a good sign.  The best case scenario is that the I fund recovers from here and pushes to complete a step 5.  At this point, I would not bet on it…  If it continues down, the next support for the I fund is the 62 level.  If that happens, it will very likely pull the C and S down with it.  

The C fund is almost at it’s step 3 high.  This is a point of significant resistance.  To date, we have not seen price moves to the upside on Big Volume that would indicate the market wants to push thru this resistance.  In addition, the technical indicators are rising but do not look strong.   

Bottom line for the long term.  The top has NOT been confirmed yet.  I am not sounding the alarm bells but, market risk is definitely high…  Exercise extreme caution if you’re still in the C,S, and I funds.

Short Term

In the short term, the C fund dipped down and touched support at 2800 before reversing later in the week.  2800 is now the critical support level on the downside.  A close below 2800 will likely take us below the lower channel line as well.  Barring a move up thru 2875 ON BIG VOLUME, this chart does not look good.  The technical indicators do not seem to support a strong move to the upside but, it is possible.  Short term market risk is definitely high until we clear the 2875 level.

The S fund continued to develop its bullish triangle consolidation pattern this week.  It dropped down to touch its lower channel line before reversing and closing near upper resistance on Friday.  This pattern is running out of time.  It will resolve itself, one way or the other, within the next several weeks.

The I fund is in serious trouble.  Drawing a horizontal channel is giving this pattern the benefit of the doubt.  In reality, each major close was just a bit lower than the previous major close.  The I fund has a good chance to rally back to its 50DMA from here.  If that happens, I would use it as an opportunity to reallocate out of the I fund…

This is certainly one of the more pessimistic posts I’ve done in recent months.  There are very few positives that can be taken from either the long or short term charts.  Having said that, the top has not happened yet.  There is no way to know when we will see the next significant top or what will “cause” the next market crash.  The best we can do is to stay alert, watch the charts/technical indicators, and manage market risk.  We may have a few more relatively passive weeks but, September/October are coming…

Have a great week!

Jerry