Sunday Update: 30 June 2019

It was a mixed week for the TSP stock funds but very constructive.  A case can definitely be made for a bit more upside from here.  For the week the C fund was down 0.29%, the S fund was up 0.57%, and the I fund was up 0.55%.  

We have been talking about 2 possibilities for the overall market going forward since the 05 May Sunday Update.  Nothing has changed this week to alter those possibilities. Please go back and read the last several Sunday Updates for a full understanding.  This week we’ll take a look at the possibilities to date and see why the S and I funds will be our primary indicators of the overall market direction.

Possibility 1

The C fund chart below shows the first possibility. IF the S and I funds can continue to rally, ultimately making new highs, then we are looking at possibility 1.  We would also want to see some very strong price and volume moves as the C fund breaks the 2975 level.  Under this scenario, the C fund moves significantly higher throughout the remainder of 2019.

Possibility 2

An IDEAL expanding triangle pattern…

The C fund chart below shows the second possibility.  If the S and I funds roll over without making new all-time highs, then we are looking at possibility 2.  Under this scenario, we would see a final leg down (E) to complete wave IV in the 5 wave rally that began at the low in 2009.  This would be a 20% move down to 2200 or lower.  Once wave E is complete, wave V will begin and take prices to new all-time highs.  If this scenario plays out, it presents an opportunity for a huge Swing Trade.  Moving to the G fund at D and back into the stock funds at E minimizes downside risk and sets us up for huge gains…

Unlike the C fund, the S and I funds have yet to take out their 2018 highs.  As we pointed out last week, this Divergence cannot continue if possibility 1 is in play.  If the S and I funds roll over without making new all-time highs, possibility 2 is happening.

Bottom Line: Watch point D on the C fund very closely AND watch to see if the S and I funds power ahead or roll over from here.  The market will tell us which way it’s going within the next several weeks…

Have a Great 4th of July week!

Jerry