It was another constructive week for the TSP stock funds.  The C fund held up above its 50WMA and closed the week near the top of the trading range.  For the week the C fund gained 0.61%, S fund gained 0.93%, and the I fund was up 0.79%.  

This week’s post will focus on the 2 long term possibilities based on the Elliott Wave count. Below is the “Theoretical Ideal” Elliott Wave Pattern.  We are either in the midst of a relatively minor correction (possibility A) or a relatively major correction (possibility B).  If possibility A then we will see higher highs in 2019 before a final top.  If possibility B then the market rolls over before making new highs and progresses below the December 2018 lows.  

Actual Possibility A

Here’s what possibility A looks like in real-life.  In this case the II-III leg is “extended”, meaning 5 legs within the III leg.  It’s patterns within patterns and can get very tricky…  IF possibility A comes to pass, TSP stock fund prices can go significantly higher thru 2019 and beyond.  The key will be a strong price move above the October 2018 high. 

Actual Possibility B

Here’s possibility B in real life.  In this case, the II-III leg is not extended.  IF the C fund rolls over before making new highs and collapses below the December lows, then we should expect prices to fall to approximately 2000.  

Bottom Line

We are in a bit of “No Man’s Land” right now.  The trading range is the October 2018 high and the December 2018 low; about 20%!  Until we breach one of those levels, we will not know for sure if we are in possibility A or B.  This is a long term perspective.  It is not really helpful in terms of week to week reallocation decisions BUT, it does give us a great structure and manages expectations going forward.  Refer back to the last couple of Sunday Updates, utilizing Daily and Weekly moving average lines, for making reallocation decisions while we remain within this long term trading range.

Next week we’ll go back to a detailed look at short-term possibilities…

Have a great week!

Jerry