The C fund has been consolidating for the past 2 weeks. After finding support at the 50DMA, prices could not get back above the 10DMA. On Friday, the C fund closed below its 50DMA for the first time since closing above it back in April. This does NOT mean that the market is getting ready to collapse necessarily (the S and I funds are still above their support levels). What it DOES mean is that the RISK has increased substantially. So how do we play this?
Part of the reason for posting the last Alert on 30 August was to retain 2 moves for this type of scenario in September. I will utilize my first move here. If the market continues down, great. If the market finds support and moves higher, I can use my second move and get back into the stock funds.
Bottom Line: The last time we saw a market correction similar to this was back in June. The C fund consolidated for the last 3 weeks of June, found support at the 50DMA and moved higher. We have a similar type of set-up now. We COULD see prices find support and move higher through the end of the year. IF that happens, we will see it clearly in the chart and get back into the stock funds. On the other hand, if the current decline picks up steam, things could get very ugly… Stay Alert.
* As always, this is NOT a recommendation. This is the allocation that works for my personal risk tolerance and observation of the market. Feel free to follow along, give it another day, or disregard completely… *