Sunday Update: 9 December 2018
After a week of wild volatility on the stock market, we are still within the trading range so nothing too interesting to discuss this weekend. For the week the C fund was down 4.6%, the S fund down 4.85% and the I fund down 3.22%. By any measure it was a horrible week for the TSP stock funds BUT, everything is relative… This weekend we’re going to focus on the 1 year, 3 year and 10 year charts of the C fund. We’ll show how applying the fundamentals of technical analysis can provide a road map, helping us navigate the months ahead.
Below is the 1 year daily chart of the C fund. You can see that we are, for the 7th time, negative for the year. We began 2018 with the S&P500 (C fund) at 2675. As of Friday, the S&P500 is sitting at 2633; about 1.5% negative for the year so far. It’s been a wild ride. The 2018 peak was 2940 in October; almost a 12% increase on the year. The 4th quarter has been ugly for TSP stock funds… So what’s the best position going forward?
We are in a pretty well defined channel since October. We have 3 high points at about 2800 and there low points at about 2625. The current price of 2633 is within the channel. A close below 2625 would be a very bad sign. We also have the 50DMA crossing the 200DMA to the downside. This is known as a “Death Cross”. It will be much more difficult for the market to turn the trend positive going forward. Based on this chart, I would NOT have my TSP nest-egg residing in the TSP stock funds at this point…
The 3 year chart of the C fund below shows a dotted line at the 2018 intra-day low of approximately 2530. This is the next short term support level if 2600 is broken. i wold expect to see some support at this level within the next couple of weeks. Any close below this level is serious!
In the big scheme of things, 2575-2600 is the critical support range. If this level is broken on a weekly basis, the next major support is 1800-2150. I expect we will see this as the low in 2019… The “Head & Shoulders” pattern is forming. A weekly close below the neckline is likely the beginning of a significant move lower.
The bottom line is, don’t get whipsawed around by market volatility. Know the top and bottom channel prices, know the patterns, and know your plan 2 moves in advance. This will keep your emotions in check and allow you to watch the market and see a change in the pattern signaling a reallocation. Until then, pay attention! Now is NOT the time to get complacent!
Have a great week..