It was a tough day for all 3 TSP stock funds. The F fund, on the other hand, has hit A BOTTOM. This Alert will focus primarily on the S fund with charts of several time frames. We will also look at the C fund and F fund. It’s going to be a long post so, grab a cup of coffee and settle in…

How Many Inter-fund Transfers (IFTs) Can I Make Per Month?

This was the question of the day in our Face Book Group. We will go into this in great detail in both the Weekly Update Show and the Weekly Update Newsletter this coming Sunday. Here’s the bottom line:

  • We get 2 Inter-Fund Transfers (IFTs) per calendar month between any funds we choose.
  • Any subsequent IFT can only increase our holdings in the G fund.

Prior to today’s Alert, my allocation was 50% C Fund and 50% S Fund. Today was my 3rd IFT in the Month of March. It was possible because I did not increase any holdings other than the G fund. I maintained the C fund fixed at 50%, reduced the S fund to 0%, and increased the G fund to 50%. Let’s say the C fund breaks down over the next few days. I could make a 4th IFT to 25% C fund and 75% G fund for example. The rules allow me to make an IFT everyday for the remainder of the month, reducing the C fund and increasing the G fund, if I choose to do that. I cannot IFT ANY money into ANY of the other funds until 1 April.

Why Did We Post This Reallocation Alert?

First let’s look at the S fund chart this morning when I made the reallocation decision. As we discussed this past weekend, the S fund chart was in much worse shape than the C and I fund charts because of the lower highs and lower lows. The S fund hit a high on 16 February and then put in a low on 7 March. The 7 March low was lower than the late January low. That’s the first red flag. Price recovered from March 7 the put in a high on 16 March. The 16 March high was lower than the 16 February high. That was the second red flag. At 10:45AM, price breached below its most recent low. This was the decision point. At this point, the risk of further price decline outweighed the potential for prices to move higher. This is exactly how and why I made the decision to reallocate from the S fund to the G fund.

The chart below is what the S fund looked like, on a daily basis, at 10:45AM this morning. While yesterday, the S fund had found support at its 50DMA, today it was clearly breaking down below that support level.

By the end of the day, here’s what the chart looked like… The S fund closed down over 2.5% and almost at the bottom of the days trading range. If you look back over this 6 month chart, you can see that today is the first time in at least 6 months that price closed below the 50DMA without a decent reversal in the same day. This is a very negative sign. There are no guarantees but, the probability of the S fund moving lower from here outweighs the possibility of it moving higher in the short term. While the 50DMA and 10DMA have been acting as support for the S fund, the moving average lines should now act as resistance. Again no guarantees but, this is an ugly chart…

We have to go all the way back to the late February 2020 CoVid collapse to find a break in the S fund of this magnitude.

Why Are We Still 50% In The C Fund?

As we discussed this weekend, the C fund chart looks much stronger than the S fund chart. The C fund price is still making higher highs and higher lows. It’s long term up-trend is still in place. While the C fund finished below its 10DMA today, the price decline was not on significantly big volume. Most importantly, we can still get support at the 50DMA line. As we’ve discussed for the past several weeks, market leadership is rotating out of big tech growth companies and into value, defensive companies. The C fund is not as effected by tech as the S fund. It is possible for the C fund to find support at its 50DMA and go on to higher highs. Obviously, a serious close below the 50DMA would be a problem for the C fund.

Can The F Fund Go Higher?

We did a deep dive into the F fund this past weekend. Please read the Weekly Update Newsletter from 21 March… The F fund has collapsed since the beginning of 2021. This collapse has played out in a classic Elliott Wave Pattern. The pattern showed that we were at or very close to a bottom. The pattern analysis was supported by the technical indicators turning up as price was bottoming. Today would have been an EXCELLENT day to reallocate into the F fund (at least in the short term)! Unfortunately, the TSP rules only allow us to IFT into the G fund after the second IFT of the month…

Bottom Line

It’s been a rough year to date for the stock funds and certainly for the F fund. Market risk is extremely high and I am erring on the side of caution. I cannot emphasize enough the need to understand where the market is from the Long, Medium and Short term perspectives. In the long term, we are due for a serious correction. This correction will take out a big chunk of the gains made since 2009. When this bear market begins, you do NOT want to be playing the Buy & Hold game… Until then, I want to eek out all the gains that this rally has left in it.

Please post questions to comments and watch the Weekly Update Show this Sunday night. We have a LOT to discuss…

Jerry