After 6 consecutive up weeks, the market finally paused. This was a very constructive week as losses were minimal and volume was relatively low. That’s exactly what we want to see, strong price moves on big volume followed by minimal pull backs on light volume. For the week the C fund was down 0.33%, S fund down 0.01%, and I fund down 0.50%.
The 3 year weekly chart of the S&P500 (C fund) below looks very strong. Prices pulled back this week but finished in the upper end of the trading range with minimal losses. In the long term, it looks like we have cleared the consolidation that began in January 2018. In the short term, the C fund is at the top of its weekly price channel. It will be good to see this upper channel line become a floor rather than resistance… A weekly close below 3050 would be a serious red flag.
While the long term chart looks great, the short chart made an important break to the downside this week. The 2 month, 30 minute chart of the C fund below shows the price has been running above the trend line since the beginning of October. This week, prices broke decisively below the trend line and did not immediately recover. This intra-day time frame doesn’t help us in making reallocation decisions but, it can be an early indicator of a topping pattern or trend change. Based on this chart, a daily close below 3090 would be a serious red flag. We will discuss if the market rolls over next week.
Below is an 8 month, daily chart of the C fund. The blue line is the 10 day moving average (DMA) line. The 10DMA line has been a great guide throughout this 8 month channel. When the price is above the 10DMA, prices continue higher. A break down through the 10DMA almost always began a prolonged move lower. Prices dipped below the 10DMA several times this week but always found support above the line by the end of the day. A daily close below this line, especially so close to the top of the channel, would likely indicate the beginning of a prolonged down turn… I am watching this chart closely.
The S fund had a constructive week but has not broken free of it’s long term consolidation. We need to see a daily or weekly close around 1475 to really call an end to the consolidation.
The 1 year I fund chart below is looking pretty strong. It’s been in a flat consolidation since the beginning of November. As long as we stay above the November double bottom, the I fund could be prepping for a new leg higher. A close below 67.50 would be a red flag.
Bottom Line: The TSP stock funds look pretty strong on a weekly basis but, in the short term, there is definitely overhead resistance. I am watching the C fund’s 10DMA closely…
Have a great week!