Sunday Update: 100% G Fund Until Further Notice.

It was a strong week for stocks as the S&P500 (C fund) did find support at the 200DMA.  So when am I getting back in the stock funds??  Keep reading…

20160403CfundDaily

“Why am I in the G fund??”.  That’s the question that’s been bugging me for the past couple of weeks as I watch the C, S, and I funds march higher.  Why did I go to 100% G fund back in late February and what will it take to get back into the stock funds?  Let’s take a look.

Why I’m In The G Fund

The chart below shows the past 2 months of the S&P500 (C fund).  After the 11 Feb low we saw 3 strong days, 2 days of consolidation and a jump to test the 50DMA on 22 Feb.  The next day, all the gains from 22 Feb were lost and on 24 Feb, the market gapped down significantly (below the 19 Feb low).  It looked like that was it for this short rally.  The market had tested the 50DMA, found resistance and was rolling over.  I had to have the IFT request in by noon to get that day’s closing price; so I executed the IFT late morning.  Unfortunately for me, the market rallied thru the afternoon and closed higher for the day.  The technical term is being Stopped Out.  With only 2 IFTs per month and lots upside resistance, the risk/reward picture did not look good.  This was a well thought out trade given the conditions at the time but, here’s the take away.  I Cannot Day Trade TSP.  Making decisions based on intra-day market fluctuations does not work for managing TSP.  IFT decisions must be made using both daily and weekly charts, not intra-day charts.  Lesson Learned!

Stop Out Day

When Am I Getting Back Into The Stock Funds?  

Ok.  So now that I’m in the G fund, what needs to happen to get back into the stock funds?  On a weekly basis, the market has gone straight up for 8 weeks.  The slow stochastic shows an over bought condition and the prices are right at the top of the channels.  There are 2 possibilities here.  First, the market consolidates for a week or 2 the explodes out of the consolidation.  That would get me back into the stock funds.  Second, the market rolls over, forms a bottom pattern and breaks out to the upside.  That would also get me back into the stock funds.  What I am NOT going to do is chase the market at the current levels.

I’m looking for an entry point to get back into stocks.  As soon as it makes sense to do so, I’m back in.  Not yet…

Stay tunes.  Have a great week and PLEASE SHARE.

Jerry