Sunday Update: 26 May 2019

It was a week of consolidation on Wall Street.  None of the TSP funds took a serious hit but, I expect this is just the calm before the continued storm… For the week the C fund was down 1.17%, S fund down 1.44%, I fund up 0.02%, and F fund up 0.35%.  The 3 Elliott Wave count possibilities that we discussed last week are still in effect.  If you missed last week’s Sunday Update, you can read it here.  

Neither the short nor the long term outlook changed much this week.  We’re going to look at a short term chart of each of the stock funds. First, let’s look at possible resistance/turning points on the 2 year weekly chart of the C fund below.  The C fund just completed 3 consecutive down weeks, coming off of an all-time high on 01 May.  The chart below shows us possible resistance levels at the 50WMA and Fibonacci levels.  Ideally, these indicators would overlap and provide a very strong level of resistance.  This is not what we see in this chart.  The 50WMA is pretty significantly above the first Fibonacci retracement level of 38%.  IF the 50WMA is violated then the next tool in the box is Fibonacci.  An intra-week spike down to the 38% retracement level with a weekly close above 2750 COULD signal an end/pause of this decline.    

The daily chart of the C fund below does not inspire confidence.  We see a double bottom at 2800 but there is nothing in this chart to indicate that bottom will hold.  If we do see a rally next week, we need a weekly close above the 50DMA (blue line) to change the short term negative outlook.  The technical indicators also point to continued downward pressure on price.

The S fund chart below is the most problematic for the short term outlook.  The 1350 level SHOULD act as support if you just look at price but, when you take into consideration the position of the moving averages, support at 1350 looks very unlikely.  The S fund is the only TSP stock fund that has broken thru both its 50DMA and 200DMA to the downside during the current decline.  The S fund tends to lead the market and has no immediate downside resistance level.  We should expect the C and I funds to follow the S fund lower in the coming weeks.  

The I fund put in a double bottom at its 200DMA this week.  The price action and technical indicators suggest that the I fund is consolidating in between its 50DMA and 200DMA.  The next significant move is likely down thru the 200DMA.

Bottom Line: Nothing of significance happened to either the long or short term outlook this week.  All 3 of the possibilities discussed in last week’s Sunday Update are still in play.  Things tend to get volatile on Wall Street during vacation season so stay alert!!

Have a great Memorial Day Weekend!

Jerry