* Alert * : 21 February 2020
New Allocation: 67% G Fund, 33% F Fund.
This was the 3rd reallocation in the month of February. As a result, we can only increase our holdings in the G fund. Since the F fund is doing very well, I left 33% in the F fund and reallocated my C and S holdings to the G fund. There are 5 trading days left in February. If the market reverses higher next week, we are stuck in the G and F funds until the first trading day of March. 5 days of potential gains is the risk right now. It’s not ideal but, it’s the best we can do given the TSP restrictions.
The C Fund rolled over on Thursday with an intra-day spike down thru the 10DMA. A late day reversal resulted in a positive close on Thursday. I was hoping this intra-day spike down was an attempt to push out short positions before moving higher. Friday’s price action put that hope to bed…
The C fund opened just below its 10DMA on Friday and continued lower throughout the day, taking out Thursday’s low. The 10DMA is my line in the sand right now; both on the upside and the downside. As you can see in the C fund chart below, once the price closed below the 10DMA in mid September, the 10DMA became a ceiling for prices until the gap up in mid-October. At that point, the 10DMA became a floor (support) for price until early December. This chart is a great illustration of the value of following the 10DMA.
Today was the 4th close below the 10DMA in the past 6 months. What makes this different is the RSI and MACD (Indicators) with respect to price. Since the mid-January high, prices have made consistent new highs but the indicators have not. This is a sign of technical weakness and a red flag for lower prices going forward. There are no guarantees but, given the 2 high volume down days in a row and the indicators rolling over, I’m happy to be reallocated to the G and F funds for the moment. We’ll see if this is an actual top or yet another head-fake as the melt up continues…
Please post questions to comments or email. Have a great weekend!
Jerry
Jerry I was too late to get this in before noon EST on Friday. Should I complete this change this morning? Please advise.
Tracy,
The answer depends on your personal risk tolerance. Please check your email.
Jerry
So I was too late to get it in my noon also but did move after noon so now I locked in losses. I really wish there was a better alert system. Hopefully thats being worked on. Theres nothing I can do at this point. Im taking a withdrawal being retired, my husband is not. I had moved 3/4 out so Im not talking a huge amount for me but a loss is still a loss
Diane,
Not that this helps but, you are not the only one who didn’t get out of the stock funds on Friday. Yes, we are improving the Alert notification by adding text functionality but, if you’re working in a SCIF, text won’t help.
To be honest, many subscribers did receive the Alert on Friday morning and chose not to act on it, based on their risk tolerance. My risk tolerance, along with an educated reading of the stock charts, dictates when I make reallocations. I tend to be on the conservative side, erring on the side of capital preservation.
Bottom line is, because of the TSP rules, this is a “Coaching” service as opposed to a money management service.
Long winded answer that hopefully makes sense..
PS, Im talking about noon on Friday, not today
What I have done is set an alarm on my phone that goes off every day at 11:30, that is my Q to check Facebook for an alert, it’s working well for me, but you have to be diligent and check it. I do have to admit I have missed one or two but if Jerry says be on your toes or the markets are going nuts no matter what I’m doing I check
It makes sense to me. I have very little risk tolerance being retired and making withdrawals. I did take your advice but unfortunately I checked my email at 12:45. The bulk of my money is not in TSP and has very little risk but also makes very little. I figured with my husband having 15 years left my money can be preserved while his continues to grow. The money in my TSP is what I take for withdrawal. Does this sound too conservative?
It does sound conservative as an overall plan. Of course, you want your TSP account to grow no matter how much you have in it… 🙂