Weekly Update: 28 June 2020
It was a rough way to end the first half of 2020 for the TSP stock funds. A rocky week was capped off by Friday’s collapse on big volume… For the week the C fund was down 2.86%, S fund down 3.08%, I fund down 0.90%, and F fund up 0.18%. The Weekly chart looks a bit better than the daily chart but, neither inspire confidence…
The Weekly chart of the S&P500 (C Fund) below shows the price closing at the bottom of the weekly range, just above 3000. The are a number of things that COULD provide support for the C fund. First, the market likes to reverse at/near round numbers, making 3000 a great reversal area. Second, the 10 week and 50 week moving average (WMA) lines are about to converge and could provide much needed support. Finally, this week’s closing price was above last week’s lowest price. Technically, it is possible for the market to find support and move higher from here. A weekly close below the 10 week moving average would be the deal breaker.
The daily charts don’t look much better than the weekly but, there is still a glimmer of hope. As we discussed last week, the 10 day, 50 day and 200 day moving average (DMA) lines are converging at the 3000 level. This convergence SHOULD provide support for price. As of Friday’s close, the C fund finished below its 10 day and 200 day moving average lines. A daily close below the 50DMA would increase market risk significantly…
The S fund has been in a well defined channel since the March lows. Each time the price has fallen to the lower channel line, it has recovered. Each time the price has hit the upper channel line, it has reversed. This week, the S fund is seriously testing that lower channel line… With the S fund below its 10DMA and below the lower channel line, market risk is very high right now.
The I fund chart looks similar to the C and S fund charts. There is a clear struggle at the 10DMA line. With the line tending lower, and high volume down days relative to up days recently, the I fund does not look good.
Bottom Line: The charts don’t look good; either from a Weekly or Daily perspective. We COULD still see support but, any further price decline next week would get me out of the stock funds completely. We should get an indication of which way prices will move by the end of next week. All 3 TSP stock funds need to get back above their respective 10DMA lines ASAP…
Have a great week! Let’s hope the second half of 2020 is better than the first half..
Jerry
why do you wait a week to see if funds will get above 10 day moving average? what if we start to move below on Monday and keep staying below ? we just had a week were we were at or below already. thanks for your time as always.Steve
Steve, I don’t understand your question. I post both the weekly and daily charts of the C fund. In the weekly chart the primary trend line would be the 10WMA (Week Moving Average). In the daily charts, we use the 10DMA, 50DMA and 200DMA. If using the weekly chart then you would need to wait the week. If using the daily chart, you would make trading decisions at each day’s close. Hopefully that helps…