New Allocation: 100% G Fund

The markets have broken down significantly over the past 3 day, beginning with Friday’s reversal and losses on Monday and Tuesday.  Importantly, the tech focused indexes like the NASDAQ and the S Fund have taken the brunt of the decline.  IDEALLY, we would see the C fund hit the upper trend line in the chart below before rolling over.  We may get to that point over the next several days but the risk/reward ratio is not worth it to me…  If the pattern below plays out, we are looking at a 20% loss over the next couple of months.  Once we bottom out at point e, we should have a very strong advance to new all-time highs. Unfortunately, we have to get down to point e first…

The very short term chart of the C fund below shows the break down thru the trend line.  A close below 2870 will put the nail in the coffin of this short term rally.

The S fund broke down following Friday’s reversal.  Today the S fund closed below its 50DMA.  While there could still be support at the 200DMA, the Head & Shoulders pattern that is emerging and the lower highs in the larger pattern do not inspire confidence.  The S fund would have to reverse and close above 1450 before I would consider getting back into the stock funds in the near term.

Bottom Line: We have 3 trading days left in this calendar month.  I do not see a reversal to the upside happening by the end of the month.  Moving to 100% G fund now preserves the gains we made in June and reduces risk to Zero going forward.  Market risk is very high right now.  If you decide to stay in the stock funds, pay close attention.  Volatility is likely to pick up in July…

Jerry

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As always, this is NOT a recommendation.  I am sharing the reallocations I make in my personal TSP account.  Each investor needs to make their own decisions based on their individual circumstances and personal risk tolerance.

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