What to do?
We are approaching the time of year that generally provides better than average returns for stocks. Almost all seasonal strategies return to equities sometime this month. I generally look to the charts to find a time to jump back in. I look to the seasonal effects as a prevailing wind to combine with technical trends, then use the news and economy to try to gauge risk. Right now the jump back into stocks is nowhere in sight for me. The RSI is negative, Slow STO is negative, and MACD is negative. Equity price trend is down. The Democrats want to raise taxes and the Feds want to raise interest rates. Early supply chain industrials show production and chemicals improving but this is probably related to the increase in housing activity rather than the overall economy.
What do we do . . . ? Maybe the best return will be to minimize downside risk. On the other hand I really hate to miss the end of the year uptick, assuming sales are good and the irrational exuberance holds a little longer.
I will be waiting until the technical indicators turn positive.
I have about 3 years before retirement. Currently I have my money 33% in F and 67% in L2020. Should I leave it or move it and when?
The top chart is a simple S&P 500 (C-Fund) line chart. The vertical dashed red & green lines are simply to highlight peaks and troughs.
The second chart is the S&P 500 Bullish Percent Index. This index simply counts the number of companies in the S&P 500 which are currently in a buy signal based on Point & Figure Analysis and divides that figure by 100. The most recent chart value, 62.80 tells us that 62.8% of the 500 companies in the S&P are sporting a buy signal. If a Bullish Percent Index is above 70% it is considered over bought and an index below 30% is considered oversold. Beware that the index can stay at these extreme levels for a long time. A break down through 70% is bearish while a break up above 30% is bullish. Equally important is knowing the direction and the strength of the trend.
The type of chart I'm using for the S&P 500 Bullish Percent Index ($BPSPX) is called the Elder Impulse System daily Chart. Each day a new vertical red, blue, or green OHLC Bar is added to the chart. A Red bar indicates that the index had a strong downward move, a Green bar indicates a strong upward move, and a Blue bar indicates the move up or down was relatively weak. The Blue dots above or below the Elder Impulse bars are a Parabolic SAR (Stop & Reverse) indicator. This is a trailing indicator that can help confirm an earlier indicators directional change. Parabolic SAR dots above the Elder Impulse line confirms a falling index and dots below the bar support a climbing index.
This one chart combines 3 indicators. Since the S&P 500 Bullish Percent Index is an indicator by itself, Parabolic SAR and the Elder Impulse System are acting as indicators applied to an indicator.
A) Elder Impulse System gave a strong Red bar down on September 9th
B) Parabolic SAR confirmed the direction change on the same day
C) The Bullish Percent Index fell below 70% on October 4th and continues to fall
The next chart in the series is a Vortex Indicator (VTX) which uses 2 oscillators to capture positive and negative trend movements. Simply put, when the green line crosses above the red line that's a bullish sign and vice versa. The Vortex indicator confirmed the downward trend change on September 12th and continues to support a downward move.
The next chart is probably more familiar to some of you. The RSI chart is a relative strength indicator and is often an early warning indicator. A move down below 70 is bearish and a move above 30 is bullish. RSI moved below 70 on August 2nd and is now below 30 but still moving down.
Last but not least the Moving Average Convergence Divergence Indicator, probably the most popular indicator in trend analysis. But this time it is being applied to the S&P Bullish Percent index. As with the RSI above, I am using an indicator on an indicator. We saw the initial bearish crossover form on August 15th with a cross below the 0 line on September 15th...
Disclaimer: Joe Schmoe investor here, no endorsement of any product/service intended
Everyone wants to maximize their retirement savings and the TSP is no exception. Despite the fact that we cannot be very agile using this investment vehicle, having a system in place based off proven results and techniques is most certainly a good place to start. I started off this year modeling my TSP moves roughly off the seasonal strategy (a back tested proven system). While it served me well for the few months I used it, I wanted to play around with other methodologies (something I encourage my troops to do is try out new things).
Around the middle of the year, I decided to subscribe to a professional TSP advisory service for a few reasons: 1) it did not make any grandiose claims 2) it has a time-tested, solid strategy based off reliable technical indicators 3) it actually admits that the TSP is their least favorite investment vehicle 4) and most importantly, the nature of their strategy is such that while it might miss out on some gains here and there, the system excels at defending against downturns. What was a loss for many to the tune of 38-40% in 2008 was mitigated to ~10% for a subscriber. Unbelievable! To me the most valuable skill an investor can have is patience but a close second is the foresight to avoid cataclysmic events such as 2008.
Let’s talk about news. Russia and U.S. are increasing rhetoric, something to be closely watching as Hillary Clinton appears more and more likely to succeed President Obama. Putin does not like Hillary and we can expect a greater likelihood of some tumultuous markets if that animosity continues and she does get elected. President Duterte of the Phillipines is cozying up to China and shunning the U.S. which could potentially have an effect on the markets as well. Honestly, there is a lot going on but remember that a lot of this is already priced in and it is often best to not get caught up in the noise. Be aware of the news but don’t let it be a factor in your decision making most of the time.
Speaking of that, remember that fundamental and technical analysis will best serve your interests. Mr. Market often behaves irrationally but a good investor maintains focus on the long term which negates all the silly short term nonsense we encounter because of random news. Let people worry about 1-2% gains here at the expense of severe losses because they did not have an exit plan or their plan was not grounded in any fundamental investor policies. We tend to focus on things like “omg I missed a 1 day 2% increase in S fund” but we are less likely to remember when we were happy campers in the dorky G fund completely shielded against weeklong 6-8% downturns. Recovering losses should be minimized at all costs.
And finally, just some minor analysis. As of today, 12 Oct 2016 (my...
The forum has gone quiet as of late. What used to be a great place for exchange of analysis, information and speculation has lost a lot of that and I've stayed hopeful it would revive a bit. Anyway, on to the topic. We're sitting at key support right now (2130). The surprise post-brexit rally seems to have run out of steam. The question now is, will the range we've been in for a few months keep going or are we going to break to the downside, below 2130 and back into the ranges we've seen for most of 2016 and along with it, a return to high volatility and severe swings in both directions? Cramer had a good piece on how several market darlings have underperformed and appear to be on the verge of major declines which have eroded sentiment and weighed on the market as a whole. The Fed is clearly in play and despite the incumbent party looking like a shoo-in for the upcoming election, perhaps the instability developing between the US and Russia is weighing on investors. If things are going to stay range bound, this could be a really good buying opportunity for a run back up towards 2200. If it breaks to the downside, there may be substantial pain ahead. I'd love to hear everyone's thoughts...see some charts...get opinions, etc on what folks are thinking at the moment and what their strategies may be. Myself personally, I've slacked on a couple trading opportunities during the current range, but those would have only been quick in and out moves to try and grab some gains off range-bound price oscillations, buying near the bottom of the range and selling pretty quickly afterwards. I've been parked in G and haven't seen anything that made me believe I should be parked back in equity funds for an extended time and I personally believe bond prices are going to decline so I've avoided F. What say you all?
http://www.cnbc.com/2016/10/11/cramer-c ... yptr=yahoo
Thursday's Share Prices
Were not updated. Will they be corrected before Friday's closing values are computed?
Improvement Plans for the TSP
The TSP Board just released their 5-year plan for improving TSP.
"The four key goals for the 2017–2021 Strategic Plan:
Goal A – Implement a physical and technology infrastructure that optimizes and supports plan administration, agency operations, and the evolution of a new participant experience
Goal B – Ensure that the FRTIB has the right skills, competencies, and leadership at all levels
Goal C – Optimize business processes to allow continuous improvement of TSP and Agency operations
Goal D – Develop a new participant experience that enables participants to identify and achieve their targeted retirement outcomes"
"Included in this strategic plan under Goal D (2.1.) is the intent to implement additional withdrawal options to accommodate post-retirement needs. Presently, the TSP allows only one partial withdrawal which is very unfriendly."
"The problem at present is that everything comes out proportionately and cannot fully utilize the benefits of tax efficient planning. Goal D (2.2.) under the FRTIB Strategic Plan would implement the capability to invest and withdraw Roth and traditional balances separately to facilitate participant tax advantages."
And from the .pdf...
"D2. Formulate and implement plan design improvements that increase the likelihood that
participants do not outlive their TSP assets
D2.1. Implement additional withdrawal options to accommodate post-retirement needs
D2.2. Implement capability to invest and withdraw Roth and traditional balances separately
to facilitate participant tax advantages
D2.3. Launch additional Lifecycle (L) Funds in five-year intervals, e.g., 2025, 2030, 2035, etc. to allow participants to more closely align their L Fund investment decisions with their future withdrawal plans
D2.4. Launch Mutual Fund Window to increase investment flexibility
D2.5. Implement changes on participant annual statements to inform participants on the
expected sufficiency of their current and projected TSP savings"
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