New Allocation: 100% G Fund
I have 3 major reasons for reallocating to the G fund at this point. The first is procedural, the second is short term/tactical, and the third is strategic. If you have questions, please comment or email.
We began the month of November 100% in the stock funds. It’s now the middle of the month. We have one reallocation after this move, plus another move to the G fund if necessary. Ideally the market will move lower from here quickly; down to a defined support level. If we get lucky, this happens before the beginning of December. I would like to be back in the stock funds by the end of November BUT, the market/charts will dictate.
The I fund has been leading the C fund out of this consolidation. In the past 2 days, the I fund has rolled over. This can be seen in the price chart and supported by the technical indicators. As you can see in the chart, the I fund typically blows thru its 50DMA and finds support at its 200DMA. I will look to reallocate to the stock funds when the I fund hits support at its 200DMA and when the technical indicators bottom out and turn up.
Finally, and most importantly, We are sitting on the upper channel line of the expanding triangle. IF this a-b-c-d-e price pattern plays out, we are looking at a significant decline (about 30%) over the next 6 months. More to follow in this if it plays out.
Bottom Line: I’m not predicting a 30% market decline. I’m just pointing out the possibility. Until we get past that as a possibility, it must be respected. A close above 3150 would be strong evidence that the a-b-c-d-e pattern had failed. A close below 2800 pretty much guarantees that we’re going down to e (IV). .. Watch the I fund price chart and technical indicators.