An Example Of Technical Analysis On The Fly

Here’s the scenario… It’s 10:30AM East Coast time. I need to decide if today is the day to make a reallocation decision within my TSP account. I’ve already studied the long term (weekly) and short term (daily) charts. I know the market is at a possible inflection point. I have 90 minutes to make my Inter-fund Transfer (IFT) and get today’s closing price. How do I make the final, last minute decision? Enter the Intra-Day Charts…

TSP is a wealth building vehicle, NOT a day trading platform. Having said that, we do have to pull the trigger on a certain day. Analyzing price in a top down way, Monthly – Weekly – Daily – Intra-Day, enables us to make the most timely and informed reallocation decision possible.

So, it’s 10:30AM East Coast time and I’m looking at the chart of the C fund below. This is a 2 month chart where each vertical tick represents 30 minutes of time. What stands out in this chart that can help me decide whether or not to reallocate today?

First is support.

Support at 4125 was well established, having been tested several times since early April. This support level failed on 11 May and price put in an initial bottom at 4050. The support level was retaken on 15 May but price failed to make new highs. The C fund rolled over on 19 May, gapping down thru the support level. It tested the prior low but, DID NOT go below it. Finally, the support level was retaken again on an opening gap up on the morning of 20 May.

Second is the declining trend line.

When we connect the highs since early May we get a declining trend line. The gap up on 20 May hit resistance at this trend line. For a new rally to begin, price must power up thru this trend line!

Bottom Line

Staying above the prior low is key. An intra-day price push below 4050 would trigger a sell signal. A push above the declining trend line would be very bullish. Price would then be above both the trend line AND the 4125 support level.

Given the chart above, I don’t have enough data to make a reallocation decision. Until price triggers to the upside or the downside, I will watch and wait. To do otherwise would require a crystal ball…