Sunday Update: 30 October 2016

Sunday Update: 100% G Fund

Wow!  Yet another week of Chinese Water Torture for the markets.  Since November 2014, the S&P500 (C Fund) has oscillated within 10% of the 2,000 level.  At some point the market will break thru, one way or another…  In the meantime, the G fund continues to provide a RISK FREE low rate of return.  Rule #1, regardless of your age, how long you’ve been in government service, or how close you are to retirement: DO NOT LOSE MONEY.

Short Term

After a decent pop on Monday to test the 50DMA, the S&P500 (C Fund) moved lower throughout the week, finishing above the support line.  While the price range was narrow this week, it was significant in continuing the formation of a declining wedge pattern.  The declining wedge USUALLY resolves downward so, the 2110-2115 support level is really important here.  A close below 2110 would likely mean the beginning of a new leg down.

Long Term

On a weekly basis, not much happened this week.  The C fund closed slightly down for the week but stayed above recent support.  A weekly close below 2100 would have us firmly back in this 2 year long, 1800-2200 trading range.

The S fund was the worst performer this week.  Unlike the C fund, the S fund took out its recent support level and is headed down to its 50 Week Moving Average (WMA) at 85.  It will be interesting to see if the S fund can hold the 85 level.  The 50 and 200 WMA will converge just below this level.  A weekly close below this convergence would be a very bad sign.  When the 50 crosses down thru the 200, this is known as the “Death Cross”…

The I fund is holding strong above its recent support level and above its 50WMA.  There is a pretty clear channel pattern between 52 and 60.  If the I fund closes below it’s 50WMA, we would expect it to continue down to test the 52 level (and a perfect time for us to dip a toe back into the I fund).

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Have a great week!

Jerry