New Allocations: 100% G Fund

It looks like option 2 from this past Sunday Update is in play.  The market did rally back up above the 50DMA but could not get above 2500 before rolling over.  Today the S&P500 fell over 1.5%, closing below last week’s low and below the 50DMA.    It looks like we have finally begun a consolidation that will likely take the next few months to play out.  The market will likely swing pretty wildly over the next few months and we will be sitting in the G fund watching the show…  

As of today, the S&P500 (C Fund)  is 2.5% below the all time high of 2490.  That means we are risking a potential upside of 2.5% by moving to 100% G fund.  Since I expect the market to continue down to the 200DMA at about 2360, by moving into the G fund now we are avoiding an additional 3% decline.  Importantly, we are setting ourselves up for the big run up to follow.  So here’s the plan going forward:

  1. Move to 100% G Fund tomorrow morning before noon EST
  2. Over the next few months the market moves downward to intersect the 200DMA
  3. Move to 50% C, 50% G on the day we hit the 200DMA
  4. Wait to see which way the market breaks before committing fully 

See the chart below to get a visual of where we are.  More to follow on the Sunday Update this weekend…