Sunday Update: 21 January 2018

We are 13 trading days into 2018.  So far all 3 stock funds are up as follows: C fund +5.1%, S +4.11%, I +5.4%.  That’s HUGE!  There really isn’t too much to discuss in terms of moving money between TSP funds.  If you’re not in the stock funds, you’re behind…  In the big scheme of things the market is over valued and way past due for a significant pull back.  Having said that, I see nothing in the chart that indicates a pull back is imminent.  In fact, I’m seeing the exact opposite in the short run…

Short Term

The short term chart below gives us a look at the C fund over the past 3 months where each tick on the chart is 2 hours of time.  It’s too short of a time frame to be useful for trading TSP but, it shows us why the stock funds are LIKELY to move higher in the short run.

The “Cup & Handle” pattern is classic and USUALLY resolves strongly upward.  Once the breakout from the handle pops above the left side of the cup, the chart USUALLY continues up strongly.  In this case, the left side of the cup was created on the gap up at the open on Tuesday morning at 2807.54.  Tuesday’s low of 2768.64 was the bottom of the cup.  The remainder of the week saw the consolidation that created the handle.  In the final 2 hours of trading on Friday, the price jumped up above the left side of the cup and closed at 2802.01.  With the technical indicators also turning up, the market is set for a possible new move higher next week…

Long Term

The long term charts below give us a 5 year monthly view.  This is the timeframe I will use at the beginning of each month to determine changes in fund allocation going forward.  I’m showing them this weekend to demonstrate just of how big a move the stock funds have made in the past 13 trading days.

Take a look at the “candle stick” so far this month.  We still have a week and a half of trading to go in the month and the move on all three stock funds is huge.  You can clearly see just how big when compared to past candle sticks.  This price move is more like something coming off of a consolidation, the beginning of a new rally, rather than something late in the game.  The I fund, especially, is crushing it compared to past up months.  What’s truly amazing is that all 3 stock funds finished the week at the top of the trading range even in the face of a likely Government Shutdown!  The price charts, supported by the technical indicators, point toward higher prices going forward.  

At some point we’ll get a correction.  IF the pattern holds, the next correction should be a consolidation that sets us up for one more big push higher.  After that, we’re in for a correction along the lines of 2003/2007 or worse…  Stay tuned..

Post questions to comments and have a great week!

Jerry