* Alert * : 15 December 2020
This is an extremely technical alert, taking into account layers of technical analysis AND the TSP reallocation rules. If you’ve been reading the Weekly Update Newsletters and following the Weekly Update Show, you know that we have been watching the S&P500 (C fund) very closely with respect to its 10DMA (Day Moving Average). We have also been watching the progressive roll over of the S&P500 technical indicators on the chart. Beginning with last Wednesday’s Engulfing Candlestick, the C fund has been fighting to maintain support at its 10DMA. Yesterday’s reversal day ended that fight to the downside.
The 5 month chart of the C fund below shows each day represented by candlesticks. We use candlesticks because they give us an unbelievable amount of intra-day information. We can see that yesterday, price opened on the 10DMA line and ran all the way up to 3700 before reversing. By the end of the day price had dropped to below 3650, closing at the low of the day’s trading range, and clearly below the 10DMA. The important take-away from this chart is the daily price action over the past several days that we can see using Candlesticks.
The C fund chart below is the same as above except each day is represented by a dot. The dot is the daily closing price. Using a dot rather than a candlestick, we can take away some of the noise of the chart and see how clearly price is below the 10DMA. You can see where price attempted to find support on Wednesday, Thursday and Friday of last week. That support clearly failed on Monday. The 10DMA is now likely to act as resistance. Look at what happened in September and October in the chart below. Once price fell below the 10DMA it moved significantly lower. This method does NOT work 100% of the time, as you can see from the one day in November when price closed below the 10DMA and then continued higher.
We are currently in the best possible position in terms of the TSP rules. This is the first reallocation of the month which means we can still get back into the stock funds IF conditions warrant. The additional move we have dramatically reduces the risk of making this reallocation. The only possible downside of this reallocation is that we miss some additional upside if the market reverses higher before we get back in. The upside is that we have locked in 6.2% on the C fund and 16.7% on the S fund. If you followed along with the last Alert on 4 November, your TSP account should be higher by 11.5%.
Bottom Line: We have enjoyed a great run over the past 6 weeks. Given the current analysis of the charts and the remaining move that we have for the month, I am very comfortable locking in these gains and waiting for the next opportunity to move back into the stock funds.
As always, technical analysis is as much art as science. I am making this reallocation based on MY personal circumstances and risk tolerance. Feel free to follow along with my allocation and/or use this analysis to make your own reallocation decisions. This is NOT a recommendation for what you should do with your personal TSP account. You need to make that decision based on YOUR circumstances and personal risk tolerance.
Have a great week!
Jerry
Sorry, but I am unable to figure out the recommendation. Move all to G?
Patricia. Log in to the site and hit the Member Dashboard tab. The current allocations are shown at the top along with current and past Alerts on the right column.
Guess I’m back in “sync” now…LOL!!!
I really appreciate your service and I’ve learned a lot, and will continue to be a member. I decided not to follow this allocation to G fund. I’ll watch the market and keep an eye on it, and may do so later in the week.
Sometimes it’s hard to bite the bullet but, there’s risk either way…
Excellent! We all have different circumstances and risk tolerances…
Nice call today, great closing price and opportunity to take gains off the table. Thank you guys.
Thanks!
Like this move, was feeling it yesterday but obviously with today’s spike, today was the better day.
Thanks Jerry!
Thanks!
Do you think the pending stimulus will help boost the market?
I think any significant gain from the stimulus is already baked in. Everyone expects it. I would not expect the market to move much once the vote is finally cast. Just my opinion..
Was going to ask the exact same question, hoping it’s a “buy the rumor, sell the news” call.
One of the reasons I love this site, I take Jerry’s thoughts and blend them with my own risk tolerance and IFT appropriately.
I have been in S since November, the chart still looks bullish, I know it will eventually come down, but as long as it stays above the 10 Day and the MACD is still positive I am thinking of riding it till it starts to roll over. C and I don’t look good at all right now. Thoughts?
Sounds like a great plan to me! I don’t usually invest 100% in any one of the stock funds but, if you’ve been all in the S fund since November, you’re doing great! Any yes, I’d take profits when the S breaks below its 10DMA.
I would not be too impressed, I am still down for the year. Lol
You’re not the only one… All I see in my feed are people bragging about their 40+% PIPs. That’s great for them! Most are no where near that! Most people rode the March correction and were lucky if they didn’t get out at the bottom. Don’t beat yourself up, just keep practicing and driving forward.
Hello, new subscriber here. How many ITF do you still have for this month with the current G allocation? I’m currently sitting at 80c/20s and have used up 2 IFTs
Tim. I have used 1 reallocation so far. I have 2 remaining since I’m in the G fund now.
What would get you back into the market? This is the scary part.
David, Friday’s reversal off of the 10DMA will almost certainly get me back into the stock funds on Monday. Be looking for an Alert on Monday morning unless the market collapses at the open…
Getting tired of seeing all this green every. single. day. I’d like to get back in but will there EVER be a time? Need a good pull back.
John, if you’re waiting for a significant pull back, there is no telling how long you might wait. This is why I put so much emphasis on being in the stock funds when the S&P (C fund) is above its 10DMA.
Jerry…will follow your recommendations when you make a move.
Jerry looking for your insight. I follow Seasonal Trading and your site and if they really differ I do
more research.
Historically I Fund outperforms C and S the last week of the year. Do you think a Brexit “no deal” would make I fund more risky (even if it is just a week)?
Phil, I don’t know about Brexit specifically effecting the I fund but, the I fund chart looks very strong right now in terms of support at its 10DMA.