TSP Portfolio Signals LONG Across the Board

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While it pains me to say this, all my indicators show that we need to move back into stocks.  Even the 4-Fund version, which includes the F-Fund/AGG, is indicating such a move.

Before we go there though, let me explain why this one is "different".  Luckily, I can talk about now as well as about the past from the same chart:

The first thing that I want to draw your attention to is the area listed as 9/10 -- September 1st, 2010.  Now go up to the window entitled "MACD" directly above that date.  See where the MACD lines crossed, and the status of the MACD Histogram on September 1st?  The MACD and MACD signal lines were NEGATIVE, they crossed in NEGATIVE territory, and for the next two months they moved upward, finally crossing from above right around October 19th (this is when I issued my sell signal).  Furthermore, take a look at what the Elder Force Index (EMA and SMA) signals were doing just prior to 9/1/10 and then on the signal date after 9/1/10. 

Fast forward to now, which is the right side of the figure -- November 3rd, 2010.  Here we have a number of things happening, but most important, we have the Elder Force Index (EMA and SMA methods) both crossing back into positive territory (green), we have the MACD Histogram almost ready to cross over into positive territory, and we have the slope lines of the 13d and 34d EMAs crossing each other from below, which is a very bullish sign.

Given all of this, you would think it's time to jump into the TSP with both feet.  Well, "this time it's different".  Here's why:

We may certainly move aggressively higher in the coming days -- your crystal ball is as good as mine.  BUT, there is an arguement for not putting all of our eggs in the market:

1. The MACD line and the signal line are on the positive half of the chart window.  They can certainly move up, but they have a historical "maximum value ever achieved" and according to my records, we've only exceeded the recent peak only in the March/May 2009 time frame -- all others have turned down when reaching the region we just reached.  The past isn't a predictor of the future but where you start the future from (e.g., reference point) is a very telling indicator.  A better place to start would be if the MACD lines were in the bottom half (negative).  Well, they are not, so we should be careful.
2. The slopes of the 13 and 34d EMAs are already positive.  The crossing from below simply makes them bullish.  While they can rocket upward from here, they can't go *much* further rom here -- the higher values simply cannot be sustained.  Note that this is a metric of how fast the bull is raging, and right now, the bull is clipping along at $0.2993 / day for the 13d EMA and $0.2995 / day for the 34d EMA.  This is a good, solid gain on a day for day basis, so going up dramatically from here, while possible, isn't too likely for any length of time.

Given these things, and other minor indicators, I think it prudent to hold back 50% of our holdings in Cash. 

In terms of allocations, here is what I'm looking at with 50% in the G-Fund (money market):

3-ETF Portfolio:

I-Fund/EFA:  16%
C-Fund/SPY:  15%
S-Fund/VXF: 19%

4-ETF Portfolio:

F-Fund/AGG: 3%
I-Fund/EFA: 15%
C-Fund/SPY: 15%
S-Fund/VXF:  16%

If you make this transfer at http://www.tsp.gov/ prior to 9 a.m. or so Thursday morning then it should go into effect at the end of the day.

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Remember, you are responsible for your own trading decisions, not me.  Please take ownership for your actions and do your due diligence.

Regards,

pgd