We got a very strong price move in all 3 TSP stock funds this week.  At the close on Friday the C fund was up 3.5% for the week, S fund up 6.61%, I fund up 2.71%, and F fund down 0.35%.  While weekly PRICE moves were huge, volume was lower across the board AND, all 3 stock funds finished lower than last week’s intra-week highs.  Bottom line, I am not buying into this rally…

We know that the market moves independently from the economy and the media.  The economic data is always rearward looking while the market looks ahead 6+ months.  Having said that, the economic data right now is extremely bad and getting worse.  Friday’s numbers showed 20.5 Million Americans lost their jobs in April alone.  This brought the official unemployment rate to 14.7%!  Since the low in late March, over 30 Million people have filed for unemployment while, over the same time period, the S&P500 has increased in value by 31%!  To say there’s a disconnect is an understatement…  This Wall Street Journal article does a great job in flushing out WHY the disconnect is happening and just how tenuous this rally really is. 

I am staying out of this rally (for now) based on my personal circumstances and risk tolerance.  From my perspective, the risk of loss outweighs my fear of missing out (FOMO) at this point.  IF you want to take on more risk and your FOMO is getting the better of you, the charts do support being in the stock funds right now.

Looking at the C fund chart below, Friday’s close above the 10 Day Moving Average (DMA) is technically a Green Light to get back into the stock funds.  We want to see much stronger volume on big up days but, volume is a secondary indicator to price.  

The S fund has been riding its trend line and has room to move higher before its next resistance level.  Additionally, the technical indicators are trending higher but not yet over-bought.  The S fund could certainly move higher from here.

The I fund has been forming a relatively flat consolidation.  Having said that, it did close above its 10DMA on Friday and has room to move higher.  A lack of volume stands out on this chart.  In a real Bull Market rally we would see volume INCREASE on days when the price moves higher and volume DECREASE on days when the price goes down.  The opposite is happening right now…

    

Bottom Line: As of Friday’s close above the 10DMA, the charts do support being invested in the stock funds.  If your circumstances allow you to take on some risk, an argument can certainly be made for reallocating some into the stock funds.  My personal opinion is that we will see a better reallocation price level over the next few months.  It comes down to your personal risk tolerance…

Have a great week!

Jerry