Weekly TSP Newsletter: 11 December 2022
It was red across the board for the TSP funds. While the I and F funds are still holding up relatively well, the C and S funds are very close to collapse. For the week, the C fund finished down 3.37%, S fund down 4.83%, I fund down 1.20%, and F fund down 0.50%
On the TSP Weekly Update Show, we do a deep dive into 2023 forecasts from the finance sector, Government, the IMF, and industry. If you want to see what the experts are anticipating for 2023, checkout the show!
The Goldman Sachs chart below depicts the average forecast. The expectation is for lower prices in Q1 and Q2 followed by a strong recovery in Q3 and Q4. It will be very interesting to compare this chart to what actually transpires… In the mean time, we should be prepared for falling prices over the next several months.
TSP Fund Charts
On a weekly basis, this week’s price action MIGHT be a game changer. The C fund took out the past 4 weeks of gains and closed right on the 20WMA. RSI is right on the 50 line and MACD is beginning to roll over. The C fund has exceeded its 20WMA twice since the top in January. IF price can find support here and rally above last week’s high, the rally will continue. If not, we should be prepared for the next leg down in this Bear Market. This coming week is make it or break it for the C fund!
On a daily basis, the C fund broke below its 20DMA last Tuesday and could not close above it for the remainder of the week. 3900 is a pretty clear line in the sand at this point. The RSI and MACD have rolled over but, price has not collapsed. A close above 4000 or below 3900 will give us the next short term direction of the C fund.
The S fund has been consolidating at its 20WMA for the past 4 weeks. This week price closed below the 20WMA and below the past 3 weeks of price movement. RSI is below 50 and declining. MACD is weak, still above the 0 line, and declining. This is a sell signal on a weekly basis for the S fund.
On a daily basis, we can see that the S fund retraced to an exact 61.8% from the August high to the October low. Price was rejected, recovered back to the 61.8 level again, and rolled over to close below the 20DMA. RSI is below 50 and MACD has crossed negative. You could still argue support at a short term up trend line from the October bottom and give it one more day. Any further decline would be a sell signal on the S fund.
The I fund has been on a monster rally based on the decline in the U.S. Dollar. After 7 consecutive up weeks, price pulled back a bit this week but, the trend is clearly up. There is on reason to sell this chart. RSI is beginning to roll over but is still well above 50. MACD crossed positive several weeks ago and is still rising.
On a daily basis, the I fund has been very strong since the huge reversal day at the October low. This week’s pull back was orderly and is still well above the 20DMA. Friday’s big reversal is potentially significant. RSI and MACD have both crossed down so, we may be looking at the top of the I fund here. Weakness next week would be a sell signal for the I fund.
The F fund has been in rally mode for the past 5 weeks. This week we had an orderly pull back to the 20WMA. The biggest concern is an RSI roll over at the 50 line. A weekly close below the 20WMA would be a sell signal for the F fund.
On a daily basis, the F fund still looks very strong. We do have negative divergence between price and RSI. The early December high was the high in RSI. Wednesday’s high came on lower RSI and a declining MACD histogram. This could indicate the top of the F fund here.
Bottom Line
The C, S, and F funds look to be topping out here. The FED announcement on Wednesday should give us the next short term direction for the market.
The consensus among major investment firms is for a very weak first 2 quarters in 2023 and a strong 3rd and 4th quarter. The average forecast for 2023 is 4,000 on the S&P500 (our C fund). That means the consensus is calling for price to end 2023 about where it is right now. The only question is, how low will price go in Q1 and Q2 before recovering later in the year.
IF, and it’s a big if… IF these forecasts are correct, we have a great opportunity to conserve cash in the G fund and enter the stock funds at significantly lower prices in mid-2023. Having said that, these forecasts are almost always wrong! We need to keep an open mind and respond to the price chart.
While price may rally into the end of the year, we are not expecting much more upside. Again, a close above the August high would be a game changer…
Have a great week!
The Grow My TSP Team
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