* ALERT *: 31 December 2018
New Allocation: 100% G Fund
After writing this weekends Sunday Update I went back and took a very close look at the long, medium and short term charts with Fibonacci retracement levels and Elliott Wave count. I will explain utilizing the charts below but, the bottom line is, after the 5% move up on 26 December risk/reward is no longer in my favor to be exposed to the stock funds.
The short term wave count calls for another low before we get a real tradable rally. I expect we will see that low in early January. At that point we SHOULD get a decent recovery rally and actually see some real gains.
The chart below is from the 25 December ALERT. It shows the Fibonacci retracement levels from the low in 2009. I expect the ultimate low of this correction to be in the area of the 38% retracement level (2050-2150).
Dialing in the timeframe a bit, the chart below is 3.5 years daily with the Fibonacci retracement levels from 2009. Based on this chart, the 3 leg might be completed but we still have a 4 and 5 leg down to the ultimate low. The end of this 5 leg is what we’re looking for. This will represent a MAJOR opportunity to reallocate back into the stock funds! This chart shows that we still have room to move significantly lower. I’m not willing to be exposed to the stock funds at this point in the wave count.
The last chart is 6 month daily. As you can see, my count calls for a low in early January to complete the III wave before we get a tradable IV wave. We should see a low somewhere below 2350 in early January followed by a multi-week recovery rally (IV wave). Ideally the IV wave takes us up to about 2500 before rolling over and starting wave V.
Bottom line: The bias is for the TSP stock funds to go significantly lower from here over the next several months with a possible tradable rally in the middle. We are not yet at the level of that tradable rally. Until we get to that point, I will sit tight in 100% G fund.
* Elliott Waves are PROJECTIONS only! This is a forecast. Things may play out significantly different from what is depicted. I will make adjustments as necessary but this is my best look forward. *
Make sure you get your reallocation in by noon on Monday as this is the last trading day of December. That way you will still have 2 possible moves available in January.
As always, this is NOT a recommendation. I am sharing what I am doing within my personal TSP account. Please make your own reallocation decisions based on your personal risk tolerance.
Please post questions to comments or hit me on email.
Welcome to 2019!
Jerry
Thanks for Sharing. Have a Happy and Prosperous New Year.
Are you going to move back into the market or wait a bit longer?
I’m looking for another leg down before getting back in. We’ll see..
I had a plan in 2018 to follow the MACD, Slow Stochastics, and RSI and make my best decision looking at these indicators. I let my emotions get the best of me and I quickly went off course thinking that other groups had to be smarter than me. I don’t want to stay with a plan of staying in stocks a long as economic indicators look good, even when prices are plummeting. A stay to course mentality. I was down -7.32 in 2018, I could have been up 8 following my original plan. I went back to stock’s based on indicators starting Jan 7th. Let’s hope for a good 2019.
There are lots of ways to play the game. The technical indicators (MACD, stochastic, moving averages, trend lines,…) work for me. Fundamental analysis also works. What does NOT work is emotional decisions. Here’s to a prosperous 2019!