Sunday Update: 27 January 2019

We saw a bit of a pause this week in the rally that began in late December, but just a slight pause.  For the week the C fund was down 0.22%, the S fund up 0.26%, and the I fund up 0.14%.  

The big news of the week was the end to the partial government shutdown!  The news came out at about 2:20PM on Friday afternoon and seemed to have very little impact on the market.  In fact, the S&P500 (C fund) trailed off slightly for the remainder of the trading day.  One would expect that the conclusion of the longest government shutdown in U.S. history would have some immediate impact on the market…  Don’t get hung up trying to attach day to day news with the stock market.  Despite what you see/hear in the media, the news does NOT drive the market.

Long Term

For our purposes, there was very little volatility in the market this week.  The long term chart barely moved from last week.  We are still sitting under the resistance of the 50WMA.  We should expect to see prices climb to this level before a significant turn lower.

Short Term 

The technical picture of the short term charts has turned up dramatically!  Friday’s gap up following several days of consolidation on the 50DMA is a very positive sign for the short term.  2700 on the S&P500 (C fund) looks to be the next natural resistance level but, that is quite a bit below resistance at the 200DMA.  We’ll have to see if C fund can push past 2700 and make a run at its 200DMA…

The short term chart of the S fund is also very positive.  Prices found support at a brief re-test of the 50DMA and popped higher on Friday.  There is still significant overhead resistance but, this is a good sign.

The I fund also moved higher following support at its 50DMA.  We should expect the I fund to move higher in the short term.

The stock funds digested the past 4 weeks of gains this week but held up very well.  In the short term we should expect prices to move higher from here.  In the longer term, there is significant overhead resistance in place for all 3 stock funds.  The long term chart of the C fund is really the key.  If the C fund can get above its 50WMA and get that line turned positive we are back in business.  While I’m optimistic in the short term, I’m still very concerned about the longer term prospects of this rally.  The 50WMA on the C fund is what to watch over the next few weeks.

Have a great week!

Jerry