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. 

Short Term

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…

Medium Term

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!

Long Term

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..

Jerry