Current Allocation: 50% C Fund, 50% G Fund

As expected, the market continued higher this week after last week’s breakout above 2400.  In the short run, I absolutely expect the stock funds to move higher over the next month and possibly longer, this is why I am staying 50% invested in the C fund (for now).  In the long run, I am very concerned that we are at/near a major market top.  I don’t want to be fully invested in the stock funds when the market rolls over.  

There is a very big difference between allocating funds to get the most from a retirement account, and attempting to time the market for short term gains.  The purpose of this site is to allocate funds to maximize your TSP retirement account.  With that in mind, the most important chart to understand right now is the Very Long Term.

Very Long Term

Below is what the next several years COULD look like.  We are almost certainly in the final months of the bull market that began in early 2009.  We have had 5 clear steps up over the past 8 years without a meaningful correction.  A 3 step move down to the 1600 area would be a 50% correction to the rally since 2009 and resistance at the 2000 and 2007 highs.  This is about as far into the future as I’m willing to look.  The most important thing to keep in mind is to be 100% in the G fund when this down turn begins.    

Short Term

Switching gears, the short term chart looks great!  The C fund gave us a reversal on Wednesday after an intra-day touch of the 2400 level and then rose higher Thursday and Friday.  This is a very positive sign for the short term.  Volume was not great but, that is to be expected at this point in the rally.    

Long Term

The long term (2 year weekly) chart of the C fund validates exactly what we’re seeing in the Very Long Term and Short Term charts.  There is still room to move higher over the next month or so, volume is decreasing as prices move up, and RSI is over bought.  The rally is not over yet but, all the chart patterns and indicators are coming together to show a major top is not far off..

The S fund chart shows the most room for potential growth right now.  This past week the S fund cleared consolidation and has more room to run up than the C fund right now.  Also, the RSI has not hit an over bought level yet.  

The I fund continues up like a rocket!  It’s tough to know how high it can go before some kind of correction but, the current rate of increase is not sustainable in the long run.  Having said that, if I were in the I fund, I’d be holding on for the ride…

I am clearly hedging my bets right now with only 50% invested in the stock funds.  I hate to leave potential gains on the table but, I am constantly referring back to Rule #1, Don’t Lose Money.  The market goes down much faster than it goes up and we are very close to a significant market top.  At this point, I am happy to take 1/2 of the near term gains while only being 50% at risk for when the down turn happens.  

As always, this is where I am in my TSP account.  If you have the stomach to be fully invested in the stock funds right now, you will likely make more money in the short term but just pay very close attention…  If you are more risk averse, moving to 100% G fund now and going on vacation is not a bad option either.  I would keep my eye on the Very Long Term chart.

Have a great week and please post questions to comments.

Jerry