New Allocation: 50% C Fund / 50% G Fund

I am cautiously dipping back into the funds here for a handful of reasons that I’ll explain below.  Most importantly, I have a technical reason for getting into the stock funds at 50%, I know the downside risk, and I know when I will increase my position in the stock funds if the market does move higher.  I’ll explain it all below beginning with the long term chart and moving to a short term.

The 2 year weekly chart of the C fund is playing out in 5 waves.  Based on my best ElliottWave count, we should be at the end of wave 4 and ready to begin wave 5 up.  This position is bolstered by the consolidation that has played out along the trend line with the 200DMA in close proximity.  The count clearly needs another leg higher and my best reading is that it’s ready to begin.  

The short term chart below shows the 4 leg playing out in an a-b-c-d-e falling wedge pattern.  This is a bullish pattern in a larger up trend which is what we have now.  We have 3 good points of support at the 200DMA including today’s bullish reversal.  If the market does begin leg 5 from here, we will have moved into the stock funds at the bottom of the pattern with the least market risk.  

The absolute downside market risk is 1.75% since we’re only 50% in the C fund for now.  If the C fund rolls over and closes in the 2550 level then I’ll move to 100% G.  If the C fund takes off from here then, when it passes the 2725-2750 level,  I’ll move to 100% stock funds.

One final consideration.  This is my second reallocation for the month of April.  Next Monday is the last trading day of the month.  This is a great time of the month for hedging since we get 2 new moves beginning next Tuesday.

Please post questions to comments or email me at jerry@GrowMyThriftSavingsPlan.com.  Stay alert!  We are definitely not out of the woods yet…

Jerry