Current Allocations: 34% C Fund, 33% S Fund, 33% I Fund

It was another strong week for the TSP stock funds.  The S and I funds finished basically flat for the week but the C fund popped higher and hit the upper channel line on the weekly chart (see long term chart below).  We’ve been talking about this for the past couple of weeks but, the top or at least a pause, is coming and may actually be upon us …

Short Term

The 6 month daily chart of the S&P500 (C fund) below shows the beginning of a consolidation.  Virtually all of the gains this week happened on Tuesday when the S&P500 cleared 2350 and closed at 2367.  For the remainder of the week, the S&P consolidated between 2350 and 2370.  This is not a bad thing.  The market cannot continue to go up every day.  A healthy market has to pause occasionally, digest its gains, and move higher.  So far, this week’s consolidation looks like a healthy pause on the trail to a target of 2450-2500.

Having said that, our target range is 3.5% to 5% away and this is NOT an exact science.  If you are risk averse or planning to retire within the next 6 months, moving some to the G fund is not a bad idea…

Long Term

The channel lines are a guide.  It’s entirely possible that the market continues up from here in the short run but…  Hitting the top channel line on decreasing volume is not a good sign for continued price increase.  On the other hand, the MACD and divergence both ticked up for the week so, it’s hard to tell for sure where we will go over the next month or so.

The S Fund is also approaching the top channel/trend line.  MACD is very high and divergence is getting ready to go negative.  The top is coming…

The I fund is a little tougher to call as the chart does not look like that of the C and S funds.  The I fund has consolidated for the past 2 weeks on very low volume.  This is what we want to see.  It indicates that there is not a lot of selling at this price level.  The price chart, along with the positive MACD and Divergence, indicates likely higher prices for the I fund in the near future.

While I am anticipating a top within the next few weeks to months, my goal is to stay in the stock funds until the current upward trend changes.  That is the best way to get out as close to the top as possible without missing any last minute price runs.  Things can get very volatile at the top so, again, if you are risk averse or can’t stomach some potentially big price swings, you might consider reallocating some to the G fund.  There are still 2 more trading days in February so make them count!

Have a great week and please post questions to comments.

Jerry