New Allocations: 50% F Fund, 50% G Fund

All 3 TSP stock funds gapped down at the open.  The C fund ran down to just above 3200 before recovering most of the day’s losses.  As we’ve discussed for the past several weeks, the 3200 level is very significant.  Because the C fund found support at 3200, the rally is technically still in tact.  That being said, the price has been in a sideways consolidation since 13 July.  A daily close below 3200 means the new trend is down.  A daily close above 3300 means we are in a new leg higher. 

Honestly, were it not for the requirement to have my reallocation submitted by noon, I would not have made it.  With the intra-day low above 3200 and reversal, I would have given this another day to shake out.  Since I had to make a decision and post before noon, and Rule #1 is Don’t Lose Money, I am fine with the new allocation. 

We have enjoyed significant gains in July.  IF the market continues lower from here, then we made a great call.  IF the market rallies from the 3200 support level, we will get back into the stock funds when appropriate in early August.   

The I fund gapped down almost 3% at the open and was a big part of my reallocation decision.  Although the I fund recovered much of its losses today, it still broke significantly below the short term trend line.  This is either a head-fake or the beginning of a new leg down…  

Bottom Line: All 3 stock funds gapped down at the open, then recovered much of the losses throughout the day.  Moving to 50% F fund and 50% G Fund gives us exposure to the F fund, which is in a clear up-trend, and the safety of the G fund.  We locked in some big gains in July.  One of 2 things will happen going forward.  Either today’s gap down was short covering and the market will continue higher, OR today was the beginning of a longer term correction.  Either way, we are in good shape going into August.  

Jerry