Post options expiration week - typical results
Yesterday I published the options-week / post-options-week chart (see
yesterday comments on the bottom half of this page) and it showed us
that typical action for the market the week after options expiration
week (which this is) was that Thursdays tend to give back Wednesday's
gains. It was almost perfect as the Dow lost 68 points Thursday
after gaining 68 points on Wednesday.
History tells us that today, the Friday of post options expiration week,
is up 48% of the time with an average return of -0.01%. That is
somewhat below average. Not that we can do anything about it now,
but it's nice to know when things are going according to historical
results.
Yesterday I made an interfund transfer putting 35% into the I fund.
I hadn't made a move in a
few weeks and since we have picked up several new readers since then,
I want to address a few
questions and concerns I heard about that move from our newer visitors.
- When I say I am moving to a certain allocation, I don't always say it
but it means I am making and an interfund transfer. It is not
necessary but you can also make a change to your contribution
allocation. The contribution allocation change only affects the
new money in your account. Changing this does not have the same
impact as making an interfund transfer.
For example: If you have a $50,000 account and you contribute $100
per pay period into your TSP account, doing an interfund transfer to
100% S fund would put all $50,000 into the S fund. On your paydays
the $100 would still get put into the fund that you have designated as
your contributions allocation. If that is the C fund then you
would have $50,000 in S and $100 in the C fund after payday. If
the S fund then goes up 1%, and C fund goes up 2% then you've made $500
in your S fund allocation, and $2 in your C fund. So, where you
have your balance (interfund transfer) is the major decision. The
new money is rather insignificant if you any kind of balance. And,
the next time you do an interfund transfer, ALL of you money gets moved
again so you start over.
- I sent out the e-mail alert at 11:45 ET yesterday, only 15 minutes
before the deadline. I suspect since I am sending out nearly 8000
e-mails, it may take a while to process. It usually doesn't but it
looks as if yesterday it did. I can't control when you get your
e-mails because there could be delays on your end as well. I also
post the transactions on the
message board
before the deadline. So if I talk about possibly making a move,
you can always check this link (http://www.tsptalk.com/mb/forumdisplay.php?f=18)
sometime before the deadline to see if any changes were made.
- Why are you moving into the I fund when it is so high right now?
If the market is going to move higher and the dollar is going to fall,
you want to be the I fund. I don't know if stocks will continue to
rise, that is why I only put 35% into the stock funds, but I like the
odds that the dollar could make a short term move down in the short term
and that will help out the I fund. If I can pick up a small gain
in the next week or so, I will be happy. I didn't like that the I
fund gained 18 cents yesterday without me but that's the breaks when you
have to make a decision four hours before the market closes. I
will keep playing it by ear based on my indicators.
The main reason I am giving stocks a small shot right now is that
sentiment has actually gotten more bearish lately, even as the market
has risen. History tells us that when that happens, we could see
more short term gains but that those gains may not hold for very long.
That is why I am thinking more short term right now. I am still
nervous about a possible sell off before we get a real rally. I
don't want to be caught too exposed to stocks after being so cautious
for so long.
Lastly, the last day in February is very strong historically, as is the
first half of March.
OK - I'm boring myself so I can only imagine how you feel.
That’s all for today. Currently 65% G fund, 35% I fund. Thanks for
reading and have a great weekend.
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