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

As expected, the S&P500 (C Fund) rallied up from the 50DMA this week to begin the final 5 step within the broader (3) wave.  If that sentence make sense to you, AWESOME!  You’re starting to understand where we are within the market cycle.  If that sentence didn’t make sense, see the Short Term section of last week’s post.

Short Term

I don’t expect the market to move too much higher before beginning the (4) wave correction.  There are 2 big reasons that you can see in the chart below.  First, Friday’s close was above the prior high at 3.  This means that the 5 leg may already be complete.  Second, as the price chart moved up last week, the volume chart moved down.  Fewer  people are buying into this rally which is consistent with a 5 top.  At this point, I am looking for a good opportunity to increase my position in the G fund and decrease my position in the C fund.  I am watching the RSI indicator closely.  The next time the RSI rolls over will likely trigger a move…

Long Term

On a weekly basis, all 3 TSP stock funds had decent price jumps.  Unfortunately, these jumps came on very light volume with the RSI at or approaching elevated levels on all 3 funds.  There is still a bit more room on the upside but, we are getting very close to the top…  

It’s easy to get complacent during the summer but, now is not the time.  If you’re going on vacation or otherwise preoccupied, consider moving to the G fund now.  There isn’t much upside left but there is lots of downside risk…  You will sleep much better at night knowing your principle is safely in the G fund while on vacation.  

Have a great week!

Jerry