Sunday Update: 27 March 2016

Sunday Update: 100% G Fund Until Further Notice

Last week was not particularly exciting for the markets.  It was generally a down week as prices found resistance at the 2050 level and rolled over a bit.  On Thursday the S&P500 gapped way down in the morning to test the 200DMA but recovered by the end of the day.  This is generally a sign of strength but, the technical indicators are still rolling over.  We’ll have to see how this plays out next week.

Long Term

The long term trend is pretty clear at this point as all 3 of the TSP stock funds are in well established down trends.  We use the 5 year weekly chart to get a good picture of the longer term trend without all the “noise” of daily trading fluctuations.  As you can see in the charts below, all 3 funds have lower highs and lower lows.  Connecting the tops gives you the upper channel line and connecting the bottoms gives you the lower channel line.  We are at/near the upper channel line on all 3 funds and the Slow Stochastic is topped out.  This rally does not have much further to go before taking a breather.

“The Trend Is Your Friend” as they say.  As long as this downward trend stays in place, the only way to make money in TSP is to try to catch the moves up within the channel.  Given the limits on IFTs per month, attempting to catch these relatively short up moves is tricky at best.  If you don’t have the stomach for it, it’s best to stay in the G Fund until the longer trend changes.

Have a great week, Post questions to comments and PLEASE SHARE.

Jerry