Happy Thanksgiving everyone! Unfortunately, in terms of the TSP stock funds, there was little to be thankful for this week… The C fund closed down 3.79%, the S fund down 2.48%, and the I fund down 1.87%. This weekend we’re going to take another look at the 20 year monthly chart of the C fund with Fibonacci Retracement levels, and the 3 year weekly charts of all 3 TSP stock funds. These are very long term and medium term perspectives. As a long term TSP investor, these timeframes give us a good perspective of where the market is headed without the daily volatility.
Very Long Term
The low in 2009 on the C fund was 667. Since that time, the C fund has more than QUADRUPLED in value. It hit a high in October 2018 and now SEEMS to be forming a long term topping pattern. The most common fibonacci retracement levels are 38%, 50%, and 62%. That would bring the C fund down to a range between 1500 and 2100. As bad as October/November have been, we COULD have a long way still to go… 2600 is the line in the sand here. A monthly close below 2600 would confirm the beginning of a major decline. IF the C fund does not close below 2600 on a monthly basis, there is a possible alternate wave count that could justify another leg higher. I’m watching the 2600 level VERY closely!
Looking at weekly charts vice daily charts reduces volatility. Given the 2 trade per month rule, weekly charts are a good timeframe for TSP investors. The weekly charts of the TSP stock funds below do not inspire confidence. None of the 3 have confirmed a bottom but, there is some potential…
Since the low in 2016, the 50WMA (Week Moving Average) has provided support for the C fund price level. This support became resistance in October 2018. 3 weeks ago the C fund rallied above its 50WMA briefly but could not maintain it. This weeks decline really hurt the chances that the C fund will rally above the 50WMA again anytime soon. The last possible near term support is the 2600 level; the lows from early this year. If the 2600 level does not hold, the next support is the 200WMA at about 2350 or 15% lower from here…
The S fund is in a little better shape. It seems to be finding some support at it’s critical level of 1300. If this support does not hold, the S fund likely falls to its 200WMA at 1200 or about 8% lower from here.
The I fund is in the best relative shape of the 3 TSP stock funds. It’s already come down to its 200WMA and seems to be finding support. If the I fund can break to the upside from here, it would be a good time to reallocate some from the G to the I. If the I closes below its 200WMA then I’d immediately get out of it and back to the G fund. This is very preliminary! We need to see the indicators turn up, along with the price, before actually making a decision to reallocate.
Hopefully this helped with perspective. There is WAY too much volatility to worry about the daily ups and downs of the market. Focus on the weekly charts and know where we are in relation to trend lines and moving averages…
Have a great week!