Market Comments November 18, 2008 TSP Fund share prices as of: 11/17/08 Fund - G Fund F Fund C Fund S Fund I Fund 12.6933 11.9389 9.7857 11.1089 12.8353 $  Change - 0.0040 0.0013 -0.2566 -0.2002 -0.2063 % Chg day - +0.03% +0.01% -2.56% -1.77% -1.58% % Chg wk - +0.03% +0.01% -2.56% -1.77% -1.58% % Chg mon - +0.18% +1.69% -12.02% -15.34% -9.58% % Chg 2008 - +3.37% +0.07% -40.91% -43.87% -48.16%   L2040 L2030 L2020 L2010 L Income 11.5700 11.7853 12.1175 13.3647 12.4703 $  Change - -0.2023 -0.1810 -0.1557 -0.0859 -0.0520 % Chg day - -1.72% -1.51% -1.27% -0.64% -0.42% % Chg wk - -1.72% -1.51% -1.27% -0.64% -0.42% % Chg mon - -9.62%% -8.39% -6.90% -3.34% -2.10% % Chg 2008 - -36.57% -32.31% -27.22% -13.55% -7.42%

Today's Comments (Short Term Outlook)                             Printer friendly

Now or never When I see a daily return in the stock market with a "1" in front of it these days, it almost seems like it was a flat day.  The S and I funds lost "only 1.8% and 1.6% respectively.  The C fund was down 2.6%.  Of course a 1% move used to be considered large, but not in this market environment.   The S&P 500 dropped below that 866 level I would have liked to have seen it hold.  The reason I was watching the 866 area was because it was the 50% retracement of Thursday's big move.  It's not a great barrier, but it was an area that a market ready to rally should have been able to hold.  Now my eye is back on the 840 lows made in October.  This is one ugly chart and if it wasn't an options expiration week I would be long gone.  Instead I have put some money into the TSP funds in the hopes of catching an oversold bounce near the bottom of the recent trading range.  This may not be the wisest of moves after watching the last day and a half of trading (Friday's late sell-off and Monday's inability to hold a midday rally).                                    Chart provided courtesy of www.decisionpoint.com After last Thursday's big reversal, I was thinking that we could see a rally up toward the 1000 resistance area on the S&P, but at this point I'm just hoping I can get out before we see 800.  I will use any strength this week to get out but I will certainly be a seller by the end of the week, unless something dramatic happens.  Although next week is Thanksgiving week and the Wednesday / Friday surrounding the holiday are two of the strongest days of the year, historically.  Something to consider. Yesterday I made a statement that was inaccurate.  I made a midday update yesterday, but in case you missed it: Trader Fred did buy into an international stock ETF yesterday, but it was actually the EFU, and not EFA.  EFA is a buy of the international stocks, where EFU is an ETF that sells the EAFE short.  He was looking for a down move in the EAFE. Confusing, I know.   This went against my analysis so I think I assumed it was the EFA, but I was wrong.  My apologies if this caused any confusion.  Trader Fred subscribers probably saw this for themselves.  I also mentioned yesterday that I wanted to tell you about the adjustment I made to the Sentiment Survey System.  The system was very successful during the bull market rallies of 2006 and 2007 gaining 28% and 21% respectively.  However, once the bear market was in gear, sentiment dropped off and never really got back to levels we saw in 2006 and 2007. The adjustment I am going to make for 2009 is in the bulls to bears ratios needed to set off the buy and sell signal.  They will now be based on where the 50-day moving average is in relation to the 200-day moving average.  Here are the original and current rules: When the Bulls to Bears Ratio is: 2.00 or higher, it is overly bullish, which is bearish for the market and we have a sell signal. Less than 1.25, it is overly bearish, which is bullish for the market and we have a buy signal. The change is going to be this: If the 50-day moving average of the S&P 500 is above the 200-day moving average, we will use the above original ratios. If the 50-day moving average of the S&P 500 is below the 200-day moving average, we will use these new ratios: 1.00 or higher, it is overly bullish, which is bearish for the market and we have a sell signal. Less than 0.50, it is overly bearish, which is bullish for the market and we have a buy signal. The theory being that if the 50-day MA is above the 200-day MA, we will consider ourselves in a bull market.  If the 50 is below the 200, we'll consider it a bear market. The other change is that instead of always using the S-fund for a buy signal, we will use the C-fund when on a buy signal and the 50-day moving average of the S&P 500 is below the 200-day moving average. In 2008, the ratio has never reached 2.00 so it has been on a buy signal, and 100% S-fund all year.  Obviously this is unacceptable.  Through Friday 11/14/08, that was a loss of 42.85%, the same as the S-fund.  The new system would have given us a loss of "just" 7.07%.  I will start 2009 with the new adjustment and we'll see how it goes. That's all for today.  Thanks for reading!  See you back here tomorrow.