HI, TSP peeps. Seems like I’ve put out a lot of data the last couple of days but at the end of the month, there is a lot for me to do. Our primary moves have to be looked at to see what is a buy or a sell, and then you need to make a setup decision. I want to just cover a couple of things here because I sometimes assume that everyone has been following for a long time and knows my methods.
Ok, monthly moves are decided by the 10 period moving average that are displayed on a monthly chart. Each white data bar you see has 4 things that you should know so you can read it. The hash mark to the left is the opening price the first day of the month. The hash mark to the right is the closing price on the last trading day of the month. The top of the bar is the highest price reach throughout the month and the low part of the bar is the lowest price reached for the month.
The blue wavey line is the 10 period moving average. It looks at the previous 10 months, averages out the price and marks a point on the chart at the end of the month. As long as the closing price for each index is above the 10 period moving average, that index is a buy. When price is below the 10 period moving average, then the index is a sell.
Here is where it gets complicated. How to decide what to buy or how to allocate your money. If every index is a buy then it is simple. Every L-fund is a buy. Pick one that meets your risk tolerance. L-income is the least risky and the L-2050 is the most risky. The G-fund is always a buy and it is where safety lies. No one can decide what your risk tolerance is and everyone of us is different. My mission here is that you do not do what I did from 2000-2008. I didn’t babysit my retirement account. My method here is simple and mechanical. At the end of each month, I beg of each of you to at least look at my charts or some resource and make a decision to be in or out. Do not invest blindly. Try to be mechanical with no emotion. Look at your percentage returns and dollar values. Why? If you lose $10,000 in one day, you will panic. If you lose 1%, you will shrug it off and wait for a long term decision.
When indexes start to fall apart and they slide to sell side, it becomes more difficult to decide when to get out of higher risk L-funds, but a simple method is to look at the index inside the L-fund in question and find out what percentage of index is held inside the L-fund. Example, L-2050 as of October 2017 will hold 43% C-fund. So if the C-fund was sell, then being in this fund would likely be a bad thing. But, if you selected the L-income only 10% is invested in the C-fund and it would not affect you as badly. Personally, I just invest in each individual index as they become buys and sell them when they become sells. So, there is no one shoe fits all. We are all different. What I do doesn’t make me right or wrong, it’s my comfort level setup for myself. What each of my followers do, is not right or wrong for the same exact reasons, it’s their comfort level. The only issue that I will call you out on is if you do not do anything at all and just hope for the best. Secondly, knee jerking based on news and rumors. Just remember, drama creates more watchers which means more advertising for those tv, radio, and or newspapers. Be mechanical.
One more thing I like to make sure that everyone knows here. I hate businesses, news channels, or people who blow smoke up my ass. If you say you entered the market at the perfect time and got out at the perfect time, show me on paper. Show me a reciept. Show me the numbers. Otherwise you are just blowing smoke up my ass. I put my PIP out there for all to see. I put my moves out there for all to see. The only thing I hide from the masses is how much my account is worth. I’ll give you a little hint. If the Market was to move up or down more than 1% in one day, my account would move about $11,000 for the day. So when I invest 100% of my retirement into the C, S, and I-funds, I must be pretty confident in my methods.
Now to the daily charts. Sorry I missed last week because of a wedding and I apoligies again this week being a little late because I was travel on the road.
Right now the S&P 500 is a thing of beauty. The step ladder crawel higher with just a few blips in volatility, is what we want. Price is all time highs. Volatility is low. The DMI is spreading to the postitive. It is almost too perfect. We ride and watch until we are given a reason to get out.
The Small Cap looks like it is about to explode upwards carrying the rest of the indexes with it. Look at the DMI at the bottom of the chart. Green on Top is positive. Green on top of blue and blue on top of red is extremly positive. This could be a good 3-6 week run uphill. Just keep in mind that 3 weeks of this run has already been run as of this past Friday. So, we will ride this index also until we have a reason not too.
The International Index is not running like the S&P and Small Cap but it is holding up ok. No sell warnings or structure issues. To me it just looks like the last 3 weeks of trading has been consoloidation. It doesn’t show on the daily chart yet, but I do not expect a pause in price until we reach a resistance level around $70. Volatility is low and the DMI is returing to the positive. Everything is still indicating a buy here, so we should ride it until given a reason to get out.
Since my last daily chart post, Bonds has gone through some negative changes. September 20th, Bonds confirmed a daily sell. Because of the wedding I attended, I failed to report this. The week the monthly chart also fired a sell signal, so Bonds are showing signs of a trend change to the negative. I can tell you that the weekly chart is about 2 more weeks out before it fires a sell. So just be careful here investing in the F-fund heavliy. None of the L-fund have more the 7% invested in Bonds, so there is not a lot of risk there. So don't bail out of your L-fund just because bonds are a sell. Volatility is approaching high level, which is negative. The DMI is negative. Today, there is not much to like about bonds.
Conclusion: Right now, the C,S, and I are buy and F is a sell. That means, all L-funds are a buy, you can make your own setup like I do with the C, S, and I only. The G-fund is always a buy and never wrong. Thanks for the short conversation and feedback this week from one of my followers. I want you guys to know, if you have a question about anything TSP or Retirement, I will do my best to get you that answer. Have a great week.
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