Memorial Weekend Update

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Status:

F-Fund / AGG:  sustained up trend
I-Fund / EFA:  avoid
C-Fund/ SPY:  avoid
S-Fund / VXF: avoid

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Last week I informed you of my decision to move some monies LONG out of the G-Fund / cash, simply because the market had fallen.

Here, at 1-week plus, are the actual allocations in my TSP are as follows:

• G-Fund: 73.78%
• F-Fund: 0%
• C-Fund: 9.98%
• S-Fund: 14.25%
• I-Fund: 1.99%

To save you from looking back, the target allocations are:

• G-Fund: 74%
• F-Fund: 0%
• C-Fund: 10%
• S-Fund: 14%
• I-Fund: 2%

Not that one week makes a success, but we do have significant gains in the S-Fund, relative to the losses in the other funds, so I'm pleased.

I intend to keep this allocation for now.  Let's run down the ETF equivalents of these funds:

AGG / F-Fund

Overall, the AGG / F-Fund looks relatively strong.  Here's the chart (as with all my charts, click on the image for a larger view):

Focus on the lines in the "65d EMA Slope" window.  This graph is constructed by:

1. Take the 65d EMA of the price series
2. Take the slope of this 65d EMA 
3. Smooth the slopes using a 2d EMA (red), 8d (blue), 13d (green), 21d (black), and 34d (purple)

Here's what I'm looking for as a continuation of the trend:

• All the trend lines are pointing upward.  This is true for all but the 2d & 8d.  The 2d is showing a bit of a pullback, which is okay as long as it remains above the 34d EMA, and the 8d just started trending downward, showing some short-term weakness.  I'm not in the F-Fund/AGG, but if I were, I would not be overly concerned at the present time.  This is a strong up-trend.
• All the EMAs are positive.  This *is* the case and indicates that for *all* the EMAs, prices are appreciating for AGG

If you take a look at the lower pane which contains the price series, you'll see the 50d MA (blue) and the 200d MA (red).  

• Both are in an uptrend (e.g., sloped upwards -- bullish)
• The 50d > 200d -- bullish

Given the data that we see here, we can only conclude that AGG is bullish and there is no reason not to hold this fund / ETF.

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C-Fund / SPY

The graphic above shows the ETF SPY, which is a proxy for the C-Fund.  We're seeing very new bullish behavior in the 2d and 8d 65d slopes, but overall, we are in a significant downtrend on the SPY and aside from our target 10% position due to a 10% pullback (coincidence that these values are the same), we should avoid this equity.

Note that the 50d MA (blue) is in a downtrend, and that the prices are trading below their 200d MA.  Both of these latter indications are intermediate-term bearish.

I also note that with the exception of the 34d EMA of the slope line, all the other slope EMAs are well below 0, which is very bearish.

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S-Fund / VXF



















The 65d slope lines look very close to the SPY and the conclusions are equivalent -- VXF / S-Fund, except for our l4% target, should be avoided.

I note that the 50d MA is also pointing downward, which is bearish.

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I-Fund / EFA

EFA / I-Fund is very weak on numerous fronts:

• the 50d MA (blue) is in a downtrend
• the 200d MA (red) just started a downtrend
• all the 65d MAs are less than 0 and with the exception of the 8d, are all heading lower

I am avoiding the I-Fund except for the 2% position that I have at the present time.

I note that the high on 4/14, coupled with the low on 5/25, saw the EFA with a -21% change.  IF we see any weakness in EFA I will add to the 2% position in EFA / I-Fund from the G-Fund, and perhaps will perform a rebalance.  Stay tuned.

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Remember, you are responsible for your own trading decisions.  Please do your homework.

Regards,

pgd