New Allocation: 100% F Fund
On Friday, all 3 of the TSP stock funds closed below their respective 10DMA (Day Moving Average) line. As you can see in the 1 year chart of the C fund below, each of the 3 significant corrections in 2019 (May, July, and September) began with a breakdown thru the 10DMA. Each breakdown DID NOT result in a longer correction, however, to preserve gains and minimize downside risk, we MUST respect a close below the 10DMA.
On an intra-day basis, the need to get out of the stock funds becomes even more clear. In the 2 month 30 minute chart of the C fund below we see a lower high, a lower low, and a break in the short term trend line. While we cannot trade TSP on an intra-day basis, the daily and weekly charts are made up of the intra-day charts. This is an early indication of problems that we will see play out on the daily and weekly charts.
Because the F fund has recently broke out of a several month triangle consolidation, it is a much better option than the G fund for capturing gains while waiting for the stock funds to complete their correction. Having said that, there is still some risk of loss in the F fund but, the chart pattern is too good to pass up…
Bottom Line: A top is NOT yet confirmed. The confirmation will happen in hindsight. The breakdown thru the 10DMA is my trigger. IF the market reverses and closes back above the 10DMA within a couple of days, I will re-evaluate.
After this reallocation on Monday, there will be 4 trading days left in January. This will be my second reallocation for the month so, if the market does turn back up quickly, I cannot get back into the stock funds until 3 February.
Have a great week!