Weekly Update: 10 May 2020
We got a very strong price move in all 3 TSP stock funds this week. At the close on Friday the C fund was up 3.5% for the week, S fund up 6.61%, I fund up 2.71%, and F fund down 0.35%. While weekly PRICE moves were huge, volume was lower across the board AND, all 3 stock funds finished lower than last week’s intra-week highs. Bottom line, I am not buying into this rally…
We know that the market moves independently from the economy and the media. The economic data is always rearward looking while the market looks ahead 6+ months. Having said that, the economic data right now is extremely bad and getting worse. Friday’s numbers showed 20.5 Million Americans lost their jobs in April alone. This brought the official unemployment rate to 14.7%! Since the low in late March, over 30 Million people have filed for unemployment while, over the same time period, the S&P500 has increased in value by 31%! To say there’s a disconnect is an understatement… This Wall Street Journal article does a great job in flushing out WHY the disconnect is happening and just how tenuous this rally really is.
I am staying out of this rally (for now) based on my personal circumstances and risk tolerance. From my perspective, the risk of loss outweighs my fear of missing out (FOMO) at this point. IF you want to take on more risk and your FOMO is getting the better of you, the charts do support being in the stock funds right now.
Looking at the C fund chart below, Friday’s close above the 10 Day Moving Average (DMA) is technically a Green Light to get back into the stock funds. We want to see much stronger volume on big up days but, volume is a secondary indicator to price.
The S fund has been riding its trend line and has room to move higher before its next resistance level. Additionally, the technical indicators are trending higher but not yet over-bought. The S fund could certainly move higher from here.
The I fund has been forming a relatively flat consolidation. Having said that, it did close above its 10DMA on Friday and has room to move higher. A lack of volume stands out on this chart. In a real Bull Market rally we would see volume INCREASE on days when the price moves higher and volume DECREASE on days when the price goes down. The opposite is happening right now…
Bottom Line: As of Friday’s close above the 10DMA, the charts do support being invested in the stock funds. If your circumstances allow you to take on some risk, an argument can certainly be made for reallocating some into the stock funds. My personal opinion is that we will see a better reallocation price level over the next few months. It comes down to your personal risk tolerance…
Have a great week!
Well for me it looks as though the market is moving up slowly, it also looks to be moving just sideways too, so for me I don’t know I don’t see a big gain and with the fallout to come from the unemployment rate, plus a little over a year from hanging it up, I think I will sleep better at night and worry less in the G, happy trails all
I agree with your assessment and I’m on about the same retirement timeline. Having said that, I would NOT move all to G and forget about it. That depends of course on how you intend to utilize your TSP funds in retirement. If you’re going to cash out of TSP and use the proceeds for a down payment on a retirement home, then absolutely stay in the G fund. If you intend to roll over TSP into an IRA or stay in TSP and take periodic withdrawals, then you want your account to continue to grow. In that case, being retired changes nothing with respect to how you manage your reallocations. The only thing that changes is that you cannot continue to contribute to TSP after you retire. I expect to manage my TSP account, or roll over, in the same manner when I retire as I do now. That will ensure continued growth in my account through retirement.
Something I have been trying to figure out for a while now, no plans for a vacation home that’s out as we have a 35 foot MotorHome that we would like to get a lot more use out of, but there are still payments on it too, our house at some point we will be down sizing there is about 100k in Equity there, but the problem is my 3 legs on income. SS will be about 12 -14 a month but my pension from post office is on the low side in the neighborhood of only 850 or so, started way late at the PO, so that leaves TSP to make up the 3th leg, so I would say I guess I’m looking at still growing it going forward, just not sure how to best go about that, losing the able to add to it will make a dent in it growing that’s for sure and I don’t know if the two moves a month will help or hurt, but how or what do you roll it into that still gives you a monthly income and have the ability to manipulate funds. Lol lost
I’ve been talking with a handful of subscribers to the site that are in similar circumstances. I’m working on developing another part of the site for retiree roll-overs. Not sure what it will look like but, I expect to roll over into a Fidelity IRA to limit trading costs and maximize opportunities. More to follow as I get more structure around the idea…
Sounds very interesting look forward to the advice