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!