Current Allocations: 50% C Fund, 50% G Fund

On Wednesday the market gapped down at the open and closed at its daily low (not a good sign).  This price drop invalidates the “Cup & Handle” pattern that we presented in the 7 May update.  In the big scheme of things, this is not a big deal YET…  The Cup & Handle was part of the Short Term set up.  The long term set up is still firmly in place.  The 2 most important numbers to watch right now are 2400 on the high side and 2320 on the low side.  

Short Term

In the short term, we didn’t get what we wanted last week.  Well, you can’t win them all.  What has me a little worried is the bounce on Thursday and Friday.  By Friday the S&P had just about filled the gap from Wednesday then reversed.  It wouldn’t surprise me to see the market roll over next week and test the lower channel line.  A close below 2320 would definitely be a problem.

Long Term

On the weekly chart of the S&P500 (C fund) we had a positive reversal this week (a good sign).  As you look at the chart below, see how the weekly positive reversal almost always indicates the beginning of a new move up…

The general pattern of the C and S funds is pretty similar but, the S has a better defined channel.  It looks like we might have another week or 2 of consolidation before the S funds pops.

The I fund continues to crush it!  The I fund is definitely on a roll!  It’s much more volatile than the C fund with it’s rate of increase since the election in November being unsustainable for long…  Our hope is that the I fund pulls the C and S funds higher with it and all 3 TSP stock funds get another leg up into the summer.

We’re in “wait and see” mode.  Decisions get made when we cross either 2400 or 2320.  Stay tuned…

Please post questions to comments and have a great week!

Jerry