Weekly Update: 12 July 2020
It was another productive week for the TSP stock funds. While the weekly price move was not huge, this week’s price action was a great follow up to the past several weeks’ support at the 10WMA (Week Moving Average). For the week the C fund was up 1.76%, S fund up 1.54%, I fund up 0.91%, and F fund up 0.25%
In this Weekly Update we’ll take a look at the weekly C fund chart and the daily charts of all 3 stock funds. We’ll finish up with a deep dive into the F fund to answer a great question I receive this week on Face Book. We’ve got lots of charts so let’s dive in!
Weekly
2 important observations in the weekly chart of the C fund below. First, the price range this week remained well above both the 10WMA and 50WMA. Importantly, the C fund closed at the top of the weekly trading range. In hindsight, this week may be viewed as a breakout from the past 4 weeks of consolidation along the 50WMA and the 3000 price level. Second, the 10WMA has crossed up through the 50WMA. This is a long term bullish signal. Very positive for price expectations moving forward.
Daily
There are several important observations we can make in the daily chart of the C fund below. First, price this week shows a tight consolidation. We did not see big daily price swings throughout the week. Thursday’s test of the 10DMA was successful, followed up by a strong move higher on Friday. This is a great set-up for next week. No guarantees so, we’ll see how it plays out… Second, the 50DMA crossed up through the 200DMA. This is known as a “Golden Cross”. It is a very bullish, long term signal for the market. A daily close below 3000 is a failure of this set up.
The 6 month daily chart of the S fund also looks very strong. Following the triangular consolidation during the last 3 weeks of June, the S fund has consolidated along its 10DMA line. It’s in a great position to move significantly higher from here. A daily close below 1350 is a failure of this set up.
The I fund chart is very similar to the S fund. Following a 3 week triangular consolidation, the I fund has consolidated this week above its 10DMA. We SHOULD see prices move higher next week. A close below 60 is a failure of this set up.
The F Fund – Why I’m not invested in the F fund
The F fund is doing extremely well. Following the collapse in March, the F fund is the only TSP fund that has made new highs! The question I got was, “When are we doing a new allocation to reflect the great performance of the F fund?”. The answer is, I don’t expect to reallocate to the F fund anytime soon. See the charts below for why…
The 3 month, daily chart of the F fund below looks awesome! The chart shows a steep upward angle in price since the low in early May. While the chart looks great, you have to do the math… From the low on 11 May to the high on Friday, the F fund has gained 2.6%. Clearly this is a much better return than the G fund over the same time period. However, the stock funds were also moving higher during the past 3 months. The returns of the F fund can’t compare to the returns of the stock funds WHEN THE MARKET IS TRENDING UP.
The 3 month, daily chart of the C fund below does not look as strong as the F fund chart above. The C and F funds both had a low around 11 May then rallied to early June. While the F fund exploded higher after a brief pull back, the C fund began a much longer consolidation. The C fund has yet to exceed its early June high. Having said all that, we need to do the math. Even with the June consolidation, the C fund advanced over 15% from its low in May to Friday’s close. This is compared to a 2.6% advance on the F fund over the same time period.
Bottom Line:
The stock funds are currently being supported by the moving averages on both a daily and weekly basis. In addition, all 3 TSP stock funds are above their rising 10 Day Moving Average lines. Rule #1 is Don’t Lose Money. Rule #2 is You need to be in the stock funds when the market is trending up to maximize growth in your TSP account. Rule #2 is getting the nod at this point…
Have a great week!
Jerry
I want to throw in a little testimonial…been following you for a few months now and I admit I have taken your allocations to heart most of the time. There were a couple of times when you retreated to G and I tried to ride the wave up and got a little singed, or retreated when I should have stuck it out with the rest of you. When I was active duty and now Gov Civ I never really paid much attention to the ups and downs of the TSP, until the end of last, and the beginning of this year. China trade relations were strained and the potential (at the time) of the COVID pandemic made me think that I should move into safer waters.
The catalyst that set things in motion for me was an interview with a Port of Los Angeles rep in Jan/Feb(?) when he stated that imports to the port were down 25%. Combined with the news of trade deals going south with China and the COVID cruise ships spreading the virus, I felt the need to safeguard my investments and moved contributions to G fund (I thought it was allocations) mid Feb but realized my mistake and IFTd everything to G on 27 Feb. That is when I started to look for guidance.
I chose to subscribe, because in my meager understanding of what you are doing, you are fine tuning and using chart fundamentals unlike what the other TSP sites, like the seasonality strategies are aiming to accomplish. They seem to be a hands of once you pick your “Strat”, but you are the real-time, game day call and that is what I like and that is why since the drops in Feb/Mar I am up 20% so far this year.
Thank You.
David, I really appreciate the testimonial! It’s always challenging to be on the right side of the market. Never more so than during the last 6 months. Our game day, fire and adjust strategy gets us in the stock funds when the market is going up and minimizes downside risk when the market is trending down. It clearly worked well for you with a 20% gain so far this year! If volatility continues, the second half of 2020 could be just as risky/profitable…