It was a very constructive week for the TSP stock funds! First we’ll take a look at the 2 year weekly chart of the C fund to get a longer term picture and some things that are tough to see on the daily charts. Next we’ll look at the short term charts of all 3 TSP stock funds. They have all shown a similar consolidation pattern since the top in late January. Finally, we’ll take a look at the F fund which has been crushed by continuously rising interest rates…
The 2 year weekly chart of the C fund chart below shows the highest probability pattern right now based on my count. We need one more leg higher (5) to complete the rally that began back in early 2016. Take a look at the last 2 weeks on the chart. While last week we saw a negative reversal, this week we saw a positive reversal. The market needs to break, one way or the other, very soon. There is very little room left in this triangle pattern… Because we have seen such strong support at the 50WMA over the past 10 years, and the need for 1 more leg to complete the 10 year pattern, the odds favor prices rising from here. This is NOT a guarantee but, it is the highest probability.
The 8 month daily chart of the C fund below shows strong support at the 200DMA with prices approaching the down trend line. If prices can close above the trend line, we have a really good chance of moving much higher. A significant close below the 200DMA would definitely be a problem…
The S fund has a very similar pattern as the C fund. It’s pattern has played out in more of an isosceles triangle and is pretty much at the point. The triangle will need to resolve, in one direction or the other, very soon. We want to see support continue here at the 50DMA and a pop higher. A close above 1380 would likely confirm a new rally in the S fund. A close below 1300 would be a problem.
The I fund pattern is a bit different but could be leading the C and S. If this pop off of the 50DMA holds, and we get a close around 72, then a new rally will likely be confirmed.
The F fund chart is not looking good. Since interest rates have begun to move higher, bond prices have taken a hit. A break in the trend line is significant and, as rates continue higher, the F fund is likely to move lower.
I’m cautiously optimistic that the stock fund consolidations will resolve with a new rally higher. Having said that, it’s definitely NOT guaranteed. Either way, this consolidation will be ending soon so stay alert!
Have a great week!