* ALERT * : 13 November 2018

New Allocation: 100% G Fund.

It was a crushing day for the TSP stock funds with the C and S funds off just under 2%, and the I fund down 1.64%.  The market has not recovered well from the October pounding, and the current set up does not look good.  I am moving to 100% G fund tomorrow morning.  I don’t like executing a second move so early in the month but the market risk is just too high to keep 50% of my account at risk.   

The rationale for this move is laid out below with 1 year daily and 3 month hourly charts of the S&P500 (C Fund).  

As we talked about in this weekends Sunday Update, Elliott Wave Patterns are fractal or patterns within patterns.  The 3 month hourly chart of the C fund below clearly shows 5 steps down followed by an a-b-c correction back up to the prior 4 leg.  There are no guarantees but, based on this chart, I am looking for a pretty strong decline over then next week or so.  A close below 2600 (the 5 leg) will confirm this decline.  

The 1 year daily chart looks really ugly in terms of the 50DMA and 200DMA.  Last Friday we had some support at the 200DMA and I expected that support to continue this week and push prices up above the 50DMA.  This is clearly not happening.  A 2% breakdown thru the 200DMA at this point in a November rally is NOT GOOD.  There are no guarantees but there is very little reason to expect the market to move higher from here in the short run.  

 Market risk is extremely high right now.  I’m happy to sit on the sidelines and collect the guaranteed gains of the G fund.  Once a bottom is confirmed I’ll be back in the stock funds.  Until then, I’ll be sleeping very well at night…

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  1. hi Jerry, thanks for the hard work, do you think this will be a long term down turn, like years or just month, I know no crystal ball but just thoughts. I looking at retirement in about 2 and half years just wondering if my TSP will look just a little better or much better

    1. Bob, that’s a tough one. By historical standards we are due for a significant correction. The S&P could be lower in 2 yrs than it is now. The goal will be to identify the next major bottom and get back into stocks when the turn is confirmed.

    1. Duane, Welcome Aboard! The short answer to your question is, it depends! We had a big positive reversal today so it looks like you might have got lucky. Generally speaking, if I were still in the stock funds I’d look to get back to the G fund as the S&P500 approaches 2800 again. Please email me if you want to discuss further.