Announcement: Starting in November this Weekly Update Newsletter will only be available to paid subscribers of the GrowMyTSP.com website. The intent is to add MORE technical analysis of the market and TSP to this weekly newsletter, and provide even more value to our paid subscribers. The Weekly Update Show will still be available to the public each week and will be emailed to everyone on our email list (members and non-members), as well as our YoutTube channel and Facebook.
The market dropped on Monday and spent the remainder of the week clawing back to near even. For the week the C fund was down 0.53%, S fund down 0.25%, I fund up 0.37%, and F fund down 0.36%.
The market does what it does. We can’t force it. We need to watch, respond and apply the tools that enable us to identify changes in the trend as soon as possible. The first chart below is the C fund, 3 month daily, with Fibonacci retracement levels from the September low to the October high. We had a nice move off of the September low followed by a 2 week correction down to the 38% retracement level. The price hit 38% on Monday this week, then again intra-day on Thursday, before reversing higher. Friday closed right on the short term down trend line. An up day next week, thru the down trend line, on big volume, would be very bullish and possibly enough to increase my position in the stock funds… Watch for an Alert if this happens!
The chart above is anticipating a bullish move from support at the 38% Fibonacci retracement level. The chart below shows a less optimistic perspective utilizing the DOT method that we have discussed in past Weekly Updates. Where Candle Sticks give us the full range of price movement for the day, the dot gives us the daily closing price only. This allows us to view the data from a different perspective.
In the chart below we can see that price did not fall below the 50DMA, after regaining it in early April, until the September correction; a first for this rally. Another important, and bearish, first for this rally is the lower high in October vs September. A lower high is the first step in identifying a long term change in the trend. Support at the 50DMA through the end of October is critical if this rally is to continue…
The 6 month daily chart of the C fund below gives us the same info but applies different tools. Here we see that price found support at the 50DMA on Thursday but is yet to clear resistance at the 10DMA. A strong up day, thru the 10DMA, on big volume, would be a very bullish sign…
The S fund is clawing its way back above its 10DMA following an orderly consolidation over the past 2 weeks. Unlike the C fund, the S fund made higher highs in October vs September. The current consolidation took the price down to the September high where it found support; a very bullish sign for the S fund. A close back above the 10DMA would be an indication that the S fund is moving higher.
The I fund is stuck in this horizontal consolidation pattern that began back at the June high of 64. The trading range for the I fund is 66 on the high side and 62 on the low side. Until price breaks one way or the other, we are in a holding pattern in terms of the I fund.
Bottom Line: I am watching closely for the market to tell me which direction it will move next. At this point, after applying all the tools in my kit, I do not yet have a degree of certainty as to the next direction. The charts are giving us reason to be both optimistic and pessimistic. Stay tuned and watch the 10DMA and 50DMA on the C fund…
Have a great week!