New Allocations: 50% C Fund, 50% G Fund

Today was a very tough day for the TSP stock funds.  The C fund was down 1.82% , the S fund was down 1.89%, and the I fund was down 1.14%.  Is this the beginning of a major down turn?  There is no way to know!  Managing your TSP is all about maximizing the upside while minimizing downside risk.  We’ve been talking for weeks about where we are in the market cycle.  We are much closer to a major top than a major bottom.  There is much more downside risk, especially after today, than potential upside gain.  Having said that, we don’t want to get scared out of potential gains because of one bad day.  So, here’s the analysis:

The S&P500 (C fund) crashed down thru the 50DMA, finished at the bottom of the day’s trading range, and the indicators turned negative (all bad signs).  Volume was heavy but not as big as the big drops in December 2016 or March 2017 (see the chart).  One day does NOT make a trend but we need to have our lines in the sand to make intelligent decisions going forward.  The next resistance level is the bottom channel line at 2320 and then the 200DMA, currently at 2255.  We have 10 trading days left in the month and still have 2 reallocations.  Here’s the plan:

Tomorrow I will move to 50% C fund, 50% G fund.  This minimizes downside risk and still keeps us in the game if the market reverses course and moves higher.  A daily CLOSE below the bottom channel line at 2320 will trigger a move to 100% G fund.  A daily CLOSE above 2400 will trigger a move back to 100% stock funds.  Given the 2 reallocations per month, this is the safest technical strategy.  

Take a look at the chart below. Post questions to comments and be alert!