New Allocation: 100% G Fund

I hate to use one of our reallocations on the 1st day of the calendar month.  Having said that, the market drives trading decisions, NOT the TSP restrictions…  The C fund gapped down this morning, down almost 4.5% for the day, and closing right on its 10DMA.  That alone is enough, in this market, to reallocate to the safety of the G fund.  What really closed the deal for me was 3 things:

  1. The Break in the Pattern.  As you can see in the C fund charts below, following last weeks huge rally, we had several days of consolidation forming a Bullish Triangle just below the 38% retracement level.  This consolidation SHOULD have resolved to the upside but, it did not.  
  2. Resistance at the first Fibonacci resistance level.  The C fund rallied and recovered just under 38% of its losses from the high.  The 38% Fibonacci retracement level is a very common reversal area.  This morning’s huge gap down was a clear reversal.
  3. Resistance at the Trend Line.  We now have 2 lower highs to connect for a downward trend line (the second chart below).  This morning’s gap down was a clear reversal at the now established short term trend line.

What’s next??  Again, I have no crystal ball but, today’s gap down was likely the beginning of a new leg down to test the prior lows or to new lows.  We will watch and see what happens over the coming days and weeks.  The ONLY positive today was the relatively light volume.  On such a big gap down, we would have expected volume to be significantly higher than yesterday.  We’ll see what happens tomorrow…

We have one opportunity remaining in April to reallocate to the stock funds.  IF we get an opportunity, we’ll take it.  If not, we ride out the decline in the safety of the G fund.  Stay tuned!  The bottom will come when the majority get apathetic and throw in the towel…

Stay HOME, if you can.  Let’s get past this and Grow our TSP!

Jerry