* Alert * : 07 April 2020 (Final)
New Allocation: 70% G Fund, 30% C Fund
I absolutely DID NOT expect to be writing this Alert. Everything in me “believes” the market is ultimately going lower from here. It may eventually roll over, test the lows, or make new lows but, what I “believe” does NOT matter. I have to execute based on what the market is doing NOW. The point of Technical Analysis is to take the emotion out of reallocation decisions. Having said that, I am not ready to jump back into the stock funds 100%. I want to see another successful test of the 10DMA before putting additional funds at risk.
After running up from the 2200 low, the C fund hit 4 days of resistance at approximately 2625 then gapped back down to the 10DMA. Following 3 days of consolidation, the C fund exploded higher yesterday (On Big Volume) and closed well above the 2625 resistance level. Today, the C fund is adding to those gains.
There are lots of technical and economic indicators to watch but, at the end of the day, the 10DMA is the key. When the price is above the 10DMA, the trend is rising. When the price is below the 10DMA, the trend is falling.
I just used my second reallocation for the month of April. I can still move back to the G fund if the market rolls over but, I cannot increase my stock fund position until 01 May. Making reallocation decisions in an extremely volatile Bear Market, within the structure of the TSP is very difficult. It is what it is… If the market moves higher from here, I will get 30% of those gains. If the market rolls over, I am only 30% at risk AND can go to 100% G fund if necessary. For now, this is the best I can do keeping the 2 Cardinal Rules in mind:
- Don’t Lose Money
- Be in the Stock Funds When the Market is Going UP
Now is NOT the time to get complacent! IF the bottom is in at 2200, great! IF this is a Bear Trap, we have to be ready…
Jerry, thanks for the update. Question: Since I still have a reallocation left for April due to going to G-Fund on the last day of March instead of April 01, will you advise/alert if you suggest increasing the stock fund position? I am currently at 70% G, 30% C as of today as well.
David, great question! In general, I would add to my stock position on a successful re-test of the 10DMA. I doubt this happens by the end of the month but, you never know… In that case I would not put out an Alert as it would be very confusing to those that are in sync with my allocations now. If that set up happens, email me and I’ll let you know what I think for your circumstances.
Also in this position. What is the number we are looking for as a retest if the 10DMA?
As of tonight, the 10DMA is 2566.75. The number changes daily as it is an average of the 10 previous daily closing price. Please keep in mind, the 10DMA is a GUIDE! It is NOT an exact science…
I am in the same position as David with 1 IFT left for April. Any guidance you can give on when to jump fully (or more than 30%) into the C/S funds prior to May 1 would be greatly appreciated. Thanks for adding me! Stay safe everyone!
Hi Amy! I’m not sure that the ability to add to my stock position would be useful for the remainder of April. I would only add to my stock position if the S&P500 finds support above its 50DMA (currently 2909). There is a LOT of resistance at/near 2900. I will discuss this in detail in this weekend’s Sunday Update. Have a great weekend!
I took 50% out of C&S. On March 13th I think it was at 2700.00 I have 2 IFT left, do you think I should be thinking about getting 100%back into stocks?
Hi Lea. There are many ways to play this game. I would not add to my stock positions unless the market moves higher and finds support above its 50DMA (currently at 2909). There is a LOT of resistance at the 2900 level. I will be discussing this in detail this weekend in the Sunday Update. Have a great weekend.
Jerry will you discuss this theme again this Sunday?. I see that Kathy, Amy and Lea Ann are tracking on this subject as well. I realize that 2909 has not been met but has the market attained enough support to reach near the 50DMA considering its at 2800+ level. Thanks for your help brother.
This will be the focus of the post this weekend..
when would you move to F fund? I am currently in G. Have not moved this month I understand we are limited with the 2 IFTs a month so have to be wise with IFTs moves. Trying to learn as much as I can. From what I do understand F is bonds and usually when stocks (C and S) fall bonds can go up. When is it a good idea to go to F instead of G?
Great question Amy! I don’t use the F fund often because it’s not usually worth the risk for me. Ideally I want to be in the stock funds and the G fund only when market risk is very high of during down trending markets. Having said that, if the chart looks good, the F fund can be a better choice than the G fund. Please see how I used the F fund in the 27 January Alert..