Current Allocations: 34% C Fund, 33% S Fund, 33% I Fund
Depending on what financial news you read, there are LOTS of very strong opinions out there right now. Some argue that the market is ready to explode higher, while others think we have seen the top and a crash is imminent. Fear and angst are actually a positive thing. You really need to worry when everyone believes the market going higher. Try not to listen to the hype.
We are closer to a major market top than a bottom. Having said that, I don’t think we have seen the top quite yet. I can see a 10-15% move up to a final top. That does NOT mean we will get that move. IF YOU ARE RISK AVERSE OR RETIRING WITHIN THE NEXT 6 MONTHS, I WOULD BE 50% STOCK / 50% G FUND NOW. When and If we hit the top of the channel line on the chart below, then we are on borrowed time… For now, despite the hype, the long term chart looks very strong.
The short term chart holds all the fear and angst but it’s completely unnecessary. We need to see a close above 2400. When/If we get that, we go higher. On the downside, the 50DMA is 1% below this week’s close and we could see support there. The bottom of the channel is 3% below this week’s close. If no support at the 50DMA, the next support is the bottom of the channel. A close below 2325 = 100% G fund. Likely worst case is a 6% drop to the 200DMA. The risk is fully quantified. It’s the middle of the month and we still have 2 moves remaining. Make them count!
The long term (2 year weekly) charts look pretty strong but are showing their age. 2400 on the S&P500 (C fund) is the critical level. Once we get past that, we’re good to go for the last leg up. The I fund is in a different boat. The I fund paused this week following 2 huge weeks up. Hopefully the I fund pulls the S and C funds up for one more big push…
There is potential for big moves, up or down, from here. Stay alert and know your lines in the sand… Post questions to comments and please SHARE. Have a great week.