* ALERT * : 08 October 2018

New Allocation: 50% S Fund, 50% I Fund

DISCLAIMER!  This is a risky reallocation.  Market risk is HIGH.    This post is not intended as personal advice for anyone who is subscribed to this service.  We all have different circumstances and risk tolerances.  You need to make your own decisions with regard to reallocations.  I’m passing along what I am doing in my personal TSP account.  

With that out of the way…

Ok folks, I’m doubling down on the current oversold condition of the S and I funds.  I generally like to see a bottom established, and a confirmed up turn, before reallocating into the stock funds.  In this case, the set up on the S and I funds make a reallocation worth the risk to me.  

The S fund is way over sold and reversed today at the 2 year trend line.  I’m looking for a move higher from this point.  Because the chart below is weekly, we could still see prices fall a bit through this week but, the week should close at or above the trend line.  Wm%R and RSI are at levels where reversals have happened each time over the past 3 years.  Odds favor a reversal at or near this level.  *A close below 1400 is a game changer*

The I fund is back down to the channel lows on the daily chart below. It’s about a 4% move back up to the prior high at 69. Wm%R and RSI are at levels where reversals have taken place each time over the past 10 months.  *A close below 65 is a game changer *

We are due for a short term reversal in both the S and I funds.  I expect to stay at 50%S fund and 50%I fund until Wm%R gets back into the green and then turns down.  This may involve 2 reallocations since the I fund is more volatile than the S fund.  If you’re following this with me, please stay alert!  The volatility is not likely to let up any time soon…

Jerry 

 

Responses

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    1. Yes, today was brutal! I agree with you that going to G right now is not the best move. I’m writing a post that will explain where we are and the strategy for going forward. Should be out tonight.

  1. Hi there, Jerry,

    Thank you for this great alert!

    In the last year, I have really started to become more serious about my TSP; I have been reading a few different TSP-related blogs, including yours, and yesterday I decided to dive in with signing up to become a member of your site. I have enjoyed the way you break down and explain your analysis; your approach makes logical sense to me.

    I’ve read this post a number of times already.

    I did have (2) x questions for you:

    #1) I have been reading about some big changes coming to the I Fund in 2019. Do you have any thoughts on this and any potential impacts on your strategy/allocations? https://www.google.com/amp/s/federalnewsradio.com/commentary/2018/04/a-brighter-investment-outlook-for-the-i-fund/amp/

    #2) In your Alert above, you had mentioned that for the S Fund “A close below 1400 is a game changer” and for the I Fund “A close below 65 is a game changer”. Today (10OCT), it looks like the S Fund closed well below 1400 (1366.57), and the I Fund was 64.52 “at close” is what I’m seeing right now. …Forgive any novice/inexperienced understanding of this beforehand (this has been a big learning curve for me, as I imagine it is for many people…), but when you say a “game changer”, in context of the graphs/charts you had provided, would that be a “good” thing or a “bad” thing? Do you have any further thoughts based on market happenings/closing today?

    Thank you!

    1. Howard. Thanks for the comment! Lots to work with there. I’m glad to hear that the analysis makes sense you you. That’s great feedback for me! In terms of the I fund, if the changes described in the article are made it will change the make up of the fund and the index that I follow. Right now I use the EFA. The new ticker symbol would be ACWX. If you compare the two charts, you’ll see that they are pretty similar. My analysis would not change.
      In terms of your second question, today’s breakdown violated long term support lines. I am in the process of drafting a post that will address this. Expect the post out later tonight or tomorrow.
      Again, Welcome Aboard!