10OCT19 -- POTENTIAL MOVE TO CASH SIGNAL

.
Folks,

With the close of the markets today, Tuesday, October 19th, we have a move to cash signal for EFA/I-Fund, SPY/C-Fund, and although a weaker signal, for the VXF/S-Fund.  Note that GGT has NOT confirmed this transition -- these signals are being derived from Elder's 13d Force Index method as well as my 13/34d slope method. 

First, here is what GGT has to say about the TSP ETFs:

As far as GGT is concerned, we are still above historical, optimized price and volume levels so holding these ETFs is still a valid position (obviously with the exception of AGG/F-Fund).

When we dig deeper using a different method, we get a different picture.

EFA / I-Fund:

• Price closed below the 13d EMA after obeying this line for 7 weeks.  For the conservative, this is a sell signal.  For the aggressive, if tomorrow has any point in the day below today's low, then we have a confirmed sell signal.
• Elder's FI(13) signal closed negative.  This is an automatic sell of any security.
• MACD Histogram has moved negative.  This is an automatic sell of any security.

While not shown in the graph above, the slope of the 13d EMA has crossed the slope of the 34d EMA from above, also signalling severe weakness.

The link to this chart is here.

SPY / C-Fund:

While the price of the SPY did not close below the 13d, we do have two indicators shown that signal danger for this equity:

• Elder 13d Force Index is negative, which is an automatic sell signal
• MACD histogram has just transitoned negative, which is an automatic sell signal

Again, while not shown, the slope of the 13d EMA is crossing the slope of the 34d EMA from above.

These three indicators, taken together, are enough for me to transition to cash for SPY / C-Fund. 

The link to the SPY chart is here.

While we're here, we might as well take a look at VXF / S-Fund:

The price closed right on the same value as the 13d EMA, so technically, it has not violated the 7-week rule.

The Elder FI(13) value is still positive.

Not shown is the crossing of the slope of the 13d EMA and the 34d EMA from above.  This is an automatic sell signal.

The MACD histogram is newly negative, which is an automatic sell signal.  Combined with the slope 13x34 from above, we have a confirmation. 

The link to the VXF chart is here.

===============

I am a conservative investor so I will sell my positions in EFA/I-Fund, SPY / C-Fund, and VXF / S-Fund and transition everything to cash / G-Fund.  The markets may recover and move higher from here, in which case we still can use one of our transfers to get back in the market and we may miss a couple of days of run up.  I had rather do this than lose the 6% that we have gained since the beginning of September.

Place your order by 9 a.m. EDT if you want TSP to enact the transfer on the close of business on Wednesday.

===============

Remember, you are responsible for your own trades, not me.  Please do your own diligence.

Regards,

pgd

AGG / F-Fund in CASH, All Others LONG

.
Overall, the GGT system, as applied to the TSP, is still LONG on EFA (I-Fund), SPY (C-Fund), and VXF (S-Fund).  AGG (F-Fund) has transitioned to CASH.  Here's my dashboard view; as with all my images, right-click to open in a new window or tab within your browser:

If you are investing in AGG/F-Fund I recommend that you review those holdings immediately, as you are losing value rapidly.

Here is a view of AGG for discussion:

There are a number of reasons you should seriously consider moving out of AGG/F-Fund:

• Bull Power is negative.  Bull power is Dr. Alexander Elder's creation, and it calculated by subtracting the 13d exponential moving average (EMA) of price from the day's high.  When the day's high is below the 13d EMA, this value is negative.  This means that the bears are winning.
• Bear Power is negative and more negative than Bull Power.  Like Bull Power, this is calculated by subtracting the day's low from the 13d EMA of the stock.  The more negative, the more the bears are in control. 
• Elder's 13d EMA and SMA (Simple Moving Average) on the Force Index are both negative.  The Force Index (FI) is calculated by taking the change in daily price multiplied by the volume of the day.  The FI(13) is calculated by taking the EMA or SMA -- I show both.  When these two transition either way on the same day we have a powerful signal, and as you can see, they both moved below 0, which is bearish, two days ago.
• MACD histogram is negative.  This equity has lost bullish momentum and is accelerating to the downside.  It will bottom eventually, but it will take you with it.
• The slope of the 13d EMA on price has crossed below the 34d EMA on price.  We are losing price value rapidly on these two time scales.
• The 13d EMA slope is negative, which is bad.
• The 34d EMA slope has just turned negative, which is bad.  The combination of these two confirm that "the car is driving backwards and it is accelerating backwards"
• The "slope of the slope" of the 13d and 34d EMAs are pointing downward.  Not only are we losing price value rapidly, we are accelerating to the downside.
• Price is trading below the 13d (recall Bull/Bear Power) as well as the 34d EMAs.  As of Friday's data there is no floor in sight.

Again, I see no compelling reason to hold AGG/F-Fund.

==============

With respect to the other funds, they are LONG in general, but looking at the aggregate chart, they look "toppy".  Here's what I'm seeing:

This view is created by equal-weighting the EFA (I-Fund), SPY (C-Fund), and VXF (S-Fund).

As you can see, the price index for this grouping is at $164.  If you look above that area, you see that the 13d EMA slope is changing (positively) at $0.53/day and the 34d EMA slope is changing (positively) at $0.44/day.  This is healthy.

Of notice is that the 2d Force Index -- FI(2) -- has moved negative with Friday's action.  The large price change of the index, coupled with the higher-than-normal volume, has caused this value to drop below 0, which is either 1) a warning shot, or 2) a buying opportunity.  1) occurs if we do not close above the price index value on Monday and possibly continue to fall, and 2) occurs WHEN we close above the previous day's high.

This run has been strong and we can only follow the trend after it prints the day's actions, so simply be alert.

I am fully invested using the three funds in this account.  Since our buy signal was generated at the end of September 14th we have experienced the following increases to the individual positions:

Index (equal weighted):  +5.9%
EFA (I-Fund):  +7.3%
SPY (C-Fund): +4.6%
VXF (S-Fund): +6.9%

My actual portfolio has increased  +5.98% in this time frame.  If you follow me, yours should be doing the same too.

================

Trading Plan for the Next Week

Basically, do nothing and stay on autopilot.  My new contributions are going in at

• 29% for the C-Fund,
• 36% for the S-Fund, and
• 35% for the I-Fund.

as this is the present allocation of my holdings.

================

Remember, you are responsible for your own trading decisions, not me.  Please take personal ownership for your trades.

Regards,

pgd