The TSP stock funds made some gains for the week but overall, price action was not very encouraging. For the week the C fund was up 1.86%, S fund up 2.88%, I fund up 0.99% and F fund up 0.19%.
On a weekly basis, the C fund found support at its 10WMA (Week Moving Average) but closed the week well off the highs. The next couple of weeks will be extremely important. If the C fund can stay above its 10WMA then the rally will continue. A weekly close below the 10WMA would be a serious red flag for the rally that began in late March.
In the 03 May Weekly Update we talked about a simple strategy for risk management utilizing daily closing prices (dots) and the 10DMA. In the 6 month daily chart of the C fund below, you can see that the price hit resistance at the 10DMA every day this week after gapping up on Tuesday. The price needs to get back above the 10DMA for the rally to continue.
The moving average lines are about to converge. This is not a good sign as we are entering into an historically difficult time of the year for the stock funds. The 50DMA (blue line) will move up thru the 200DMA (red line). This is a long term BULLISH signal. Unfortunately, the 10DMA (green line) is rolling over and will cross the 200DMA and 50DMA to the downside. This is a short term BEARISH signal. This COULD be signaling the end of the rally OR it could be a short term consolidation for another push higher later in the summer. If the price falls below the 50DMA it will have a lot of resistance to work through to get the rally back on track. We shall see…
The S fund is still firmly within the channel. The upper and lower channel lines are well established at this point. A close below the lower channel line would be a serious red flag for the S fund rally.
The I fund is also hitting resistance at its 10DMA. A daily close below the recent low of 59 would be a red flag for the I fund.
Bottom Line: All 3 TSP stock funds currently sit below their respective 10 Day Moving Average lines and their technical indicators are trending lower. The market is not crashing at this point but, market risk is certainly elevated. We are entering into the summer months, historically an under-performing time of the year for stock funds. Now is NOT the time to “set it and forget it”! Keep an eye on the 10WMA. A weekly close below the 10WMA is a serious red flag…
Have a great week!