* Alert * : 23 March 2021
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…
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…
I hope I’m in an area with cell service when that bear alert happens! Thanks for what y’all are doing!
It won’t turn on a dime. It doesn’t work that way (usually). You gave me a great idea for a post though…
Hey Jerry, As always thanks for your advice. Unfortunately my time zone sometimes makes it tough to see and respond to your alerts in a timely manner. I missed the move yesterday. So for folks like me who sometimes miss your alerts, can you try to give “next day advice for anyone who missed the move the day before” based on any new information from the following day? I know it’s a big ask given all of the things you look at but I am now sitting here trying to figure out if I should still do the same move a day later or hold tight? Looks like I should go ahead and move as well but that’s usually when things bounce back!!
Hope all is well bro. I hear you and I understand the frustration. If you read the Alert, it shows how I came the decision to reallocate at 10:45AM. I made a decision at that point in time based on what the market was telling me, knowing that I would take that days closing price. There is no way I could anticipate another day forward. I understand what you’re asking but it’s not possible. I can’t do the crystal ball. The S fund might bounce back tomorrow. Then again, today may be the beginning of a move down. I can only operate based on the info I have at the time…
I appreciate tour time to respond Jerry and what you said. Cmon bro just mail me one of your extra crystal balls!! Completely get it. Just need to hear or read shit every now and then. Lots of tough questions at ya. Hope i didn’t start it. Hang in there.
It’s a crazy market and people are getting restless. I get that and I have pretty thick skin.. And, if you find one of those crystal balls in your travels, pick one up for me please!
I watch the sunday evening update and the dive into the F Fund. Having missed one of the Alerts for March I still had one IFT available. I understand about the two allowed and then only to the G. Today if you had mentioned in the ALert that for those who had 1 IFT available moving to the F Fund instead of the G would have been OK at least in the short term. You covered it in the explanation and the sunday show but NOT in the ALert. Why??
This is an educational service. If you want to validate your decisions against what I’m doing in my personal account, you subscribe to the site. I do not provide personal financial advice and I cannot anticipate how many moves any individual may have remaining in the month. The F fund chart looks excellent right now. Having said that, there is still obvious market risk in the F fund and, as I explained in the Weekly Update Show this past Sunday, I don’t usually utilize the F fund because the risk/reward is not usually there. The bottom line is, the Alert tells subscribers what I’m doing in my personal TSP account. I’m not advising what anyone else should do with their account. I hope that makes sense.
Great update! Thank you for the details and explanations! Kris
Thank you again Jerry! Great analysis and I admit this correction that is coming scares me. After your weekly show I took money out of S Monday which saved me Tuesday. Could u touch base on how high and low volume matters…ie where those volumes come from and how it could affect the stocks? Thank you in advance.
It’s turning into quite a week… Yes, we will definitely talk about Volume on Sunday.
Thanks for all the good information about IFT’s. I was also not sure, but all anyone needs to do is go to the TSP website or google the information. I found the information quickly. Would you and Conan be able to put on Member Dashboard where someone could find information on technical topics. I see you already do this but people are not putting the time in to read about their money.
And the FB page is getting way out hand.
Thanks John. We are continuing to build out the site. With the real-time charts, performance page, FAQ page, etc, the idea is to be the one resource you need to make decisions, then link to TSP.gov to execute.
You are absolutely right about the FB group. We are going to make some serious changes there…
May I ask a question, not trying to get you on the defense. How long have you been doing this analysis on your TSP? I feel a bit nervous since I started this in Jan and only seen losses. I recognize that starting this year with the craziest markets, and when the market at all time highs, probably was not a time for me to jump in, but I am feeling discouraged. Over my 36 year career, I did the set and forget approach. Now that I am close to retirement, I am focusing on my TSP. I watch your videos and seem to understand how you are making your choices. I definitely do not want to be in the market during the big drops since I retire end of this year. I appreciate your readings and your alerts, I just need a motivation boost to know that this works over time. Thank you.
Please ask questions! I don’t get defensive and am very happy to answer :). I started applying technical analysis to my TSP back in 2004 when TSP moved from an allotment type of system to a net asset value system. When TSP began capturing daily closing prices, you could then trade your TSP every day. This lasted for a few years but, eventually the current restrictive trading rules were put in place. I learned to read stock charts from my Dad and have been doing technical analysis for the past 30+yrs.
You definitely want to watch the Weekly Update Show this coming weekend. We are going to do a segment on the long/medium/short term perspective that will help you in making decisions that are right for you and your circumstances. I’m retiring in April after 34yrs… Don’t get discouraged! It’s even more important to manage your money in retirement since you can’t continue to contribute.
Thank you! Appreciate the info. I I will definitely watch this upcoming week!
Thank you Jerry! This is a great service you provide, wish I had started following you years ago!
Hi Jerry, In your experience how closely does the C and S Fund match the S&P and DJIA?
I just computed from 3/17 through 3/23- at market close- the S&P and DJIA lost approx. 1.8%, whereas my TSP account (which was 50/50 in C and S for that period) lost 3.2% –
a pretty significant gap of 1.5% – was a little shocked to see my balance. Have you noticed this occurring before? Thanks
you can disregard my prior question – called TSP who said funds don’t exactly match market thx
I’m sure the TSP help desk explained that the C fund tracks the S&P500 but does not match it exactly. The S fund does NOT track the Dow Jones Industrial Average (DJIA). The S fund tracks the Dow Jones U.S. Completion Total Stock Market Index (DWCPF). People often get confused about the S fund..
The I fund tracks the Europe/Asia/Far East Index (EFA) and the F fund tracks the U.S. Aggregate Bond Index.