Sunday Update: 28 April 2019
It was another great week for the TSP stock funds! For the week, the C fund was up 1.2%, S fund up 1.53%, I fund down 0.33%, and F fund up 0.48%. By the close on Friday, the S&P500 and the NASDAQ Composite Index had both hit new all-time highs AND the U.S. economy expanded at a rate of 3.2% in the 1st quarter. With the FED unlikely to raise interest rates in 2019 and the economy running on all cylinders, the outlook is very positive for the stock funds. The F fund is also doing very well and is the first chart we’ll look at this week.
The 10 year monthly chart of the F fund below is a classic example of a great breakout! We had a 2.5 year bullish consolidation from mid-2016 to the end of 2018. * An ascending triangle pattern is a bullish consolidation *. The huge volume breakout in late 2018 supported by the MACD and Stochastic turning positive are extremely positive signs for the F fund going forward.
The 2 year weekly chart of the C fund below shows the weekly all-time high closing. This is a very big deal in technical terms. Taking out prior highs, especially on a weekly or monthly basis, is very bullish. This week’s volume was significantly higher than the prior several weeks and the technical indicators have plenty of room to move higher. From a medium to long term perspective, we are in very good shape.
The short term (daily) chart of the C fund is also looking very strong. Having said that, we are due for a short term pull back. That would actually be very healthy for the market at this point. At some point the C fund will correct back down to the 50DMA. The higher we go above the 50DMA line, the bigger the % fall will be… This is where the 2 reallocations per month rule in the TSP really hurts us. The C fund currently sits almost 4% above the 50DMA and just over 6% above the 200DMA. The next short term correction will likely take prices down to one of those levels. Don’t be surprised if it happens like it did in October 2018…
The S fund is forming what’s called a “base on base” formation. We should see a breakout to the upside within the next couple of weeks and likely a run to new all-time highs.
The I fund is in the middle of its trading range here, still a few % above its 50DMA. We definitely want to see the I fund stay above its 50DMA.
Bottom line: The medium to long term outlook is excellent. HOWEVER, in the short term, we are likely to see some significant volatility once a correction begins. The S fund is likely to be the leading indicator. If the S fund “base on base” fails then the C and I funds are likely to correct as well. Stay tuned…
Have a great week!
So for your slightly more conservative members the took your bottom line to heart last week and moved out of the stock funds, should we stay put for a bit longer or reallocate, how ever it is a new month now and to move will leave just one
If you get your move completed by noon EST today it will count for April. If I were 100% G fund right now, I would stay put. I would look to get back into the stock funds on a retest of the 50DMA or confirmation that this breakout to new highs will hold.
Continue with same allocations?
I have not make a change. My allocations remain the same at 25%C, 25%S, 25%I, 25%F. This could change at any time as we approach the Fibonacci extension range.