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!