Sunday Update: 27 October 2019

We just finished the 3rd consecutive week of gains for the TSP stock funds.  While volume has been very light, price action has been constructive.  This market wants to move higher; you can see that most clearly in the I fund chart.  For the week the C fund was up 1.22%, the S fund was up 1.60%, and the I fund was up 1.13%  

We’ll look at each fund’s long and short term charts consecutively this week.  You get a different feel for price movement when looking at different time frames together.  The funds are each in a different stage of breaking out of their respective consolidations.  It’s looking more and more like Possibility #2, that we discussed last week, is in play.  

C Fund 

The C fund is the only TSP stock fund that is making new all-time highs.  The S and I funds have yet to exceed their respective 2018 highs, mostly due to the shape of the consolidations.  All 3 TSP stock funds have been consolidating for the past 5-6 months.  They all look ready to move higher.  The weekly C fund chart below shows strong support at its 50WMA.  It needs to breakthrough to about 3050, on big volume, to be finally free of this consolidation pattern.  

The daily chart of the C fund below shows the price butting up against resistance.  We have a bullish triangle pattern forming.  A strong push thru 3025 will confirm a new rally.  Any weakness over the next couple of weeks should be on low volume with prices staying above the lower trend line.  Ideally, any weakness in the C fund is supported at the 50DMA.

S Fund

The S fund has found some good support at its 50WMA but is right in the middle of the consolidation trading range.  The S fund wants to move higher over the next several weeks.  Having said that, it has a long way to go, either up or down, to break free of the 6 month consolidation pattern.  A break above 1450, on big volume, would be a very welcome signal.  A weekly close below the 50WMA would be a serious problem at this point.  

The S fund is definitely showing some strength on a daily chart basis.  A daily close out of this range (about 1460) would be a great sign that this consolidation is over.

I Fund

The I fund broke out of its consolidation this week.  That is clearly visible in the chart below.  The odds favor an upside move to test the 2018 high (approximately 72).  A weekly close below 66 would indicate a failed breakout.

On a daily basis, the I fund is getting a bit extended.  The absolute worst case for the I fund would be prices rolling over, filling the mid-October gap, and testing the 200DMA.  Ideally, any pull back does not close below 66. 

Bottom Line: The stock funds are beginning to act like they want to breakout to the upside.  We are definitely NOT out of the woods yet and I would expect some big price swings, in both directions, before a new trend is firmly established.  My current allocation is hedged in favor of prices moving higher.  IF we get upside breakouts, on big volume, I will get fully committed.

Have a great week!

Jerry