Market Comments November 7, 2008 TSP Fund share prices as of: 11/06/08 Fund - G Fund F Fund C Fund S Fund I Fund 12.6788 11.9505 10.3993 12.1716 13.6020 $  Change - 0.0013 -0.0088 -0.5464 -0.5727 -0.9154 % Chg day - +0.01% -0.07% -4.99% -4.49% -6.31% % Chg wk - +0.06% +1.79% -6.50% -7.24% -4.18% % Chg mon - +0.06% +1.79% -6.50% -7.24% -4.18% % Chg 2008 - +3.25% +0.17% -37.20% -38.50% -45.06%   L2040 L2030 L2020 L2010 L Income 12.2003 12.3369 12.5757 13.6002 12.6074 $  Change - -0.5498 -0.4846 -0.4134 -0.2223 -0.1333 % Chg day - -4.31% -3.78% -3.18% -1.61% -1.05% % Chg wk - -4.69% -4.10% -3.38% -1.63% -1.03% % Chg mon - -4.69% -4.10% -3.38% -1.63% -1.03% % Chg 2008 - -33.11% -29.14% -24.47% -12.03% -6.40%

Today's Comments (Short Term Outlook)                             Printer friendly

Just when you thought it was safe Stocks have just put in their worst two day performance in 21 years.  Only the crash of 1987 was worse in the last 50 years.  The stock funds were down 4.5% to 6.3%.  The I-fund was the lagger as the rally in the dollar added to the loss in the EAFE index. Steep interest rate cuts in Europe weakened their currencies, strengthening the dollar, and the I-fund drops 6.3%  We've been talking about this scenario and I still believe that if you must be in the stock funds, the C and S funds are your best bet until the dollar tells us otherwise. Just two days ago the S&P 500 was over 1000. The support area of 840 seemed so far away as many were starting to cheer the market strength.  If you remember, last week's sentiment survey came in with the most bullish ratio of the entire year.  Now here we are at 900 and reality has set back in on Wall Street.  I guess everyone realized that even a new president will not be able to fix the current problems any time soon.                                    Chart provided courtesy of www.decisionpoint.com The question now is, if we test the 840 area again, will it hold?  A successful test would give the S&P 500 another 6% or 7% drop from here.  But if the test fails, we're back in no man's land. Of course the other option is that stocks rally from this two day annihilation because history tells us to expect a buounce.  According to our friends at Sentimetrader.com: In the past 110 years the Dow Jones Industrial Average has had only five worse back-to-back days as Wednesday and Thursday of this week.  After those five occurrences, "The short-term was mostly positive going forward, with the Dow up 4 of 5 times by an average of +4.4% over the next three days.  A month later, it was even better...the Dow was up all five times by an average of +11.4%." So, history suggests we could bounce from here, but the weak economy is still looming large.  So what could help?  How about a stronger than expected jobs report this morning?  The estimates are for a loss of a whopping 200,000 jobs.  That is typical in a slowing economy as companies close shop or are cutting back, so the natural progression is a pick up in unemployment.  I'm not counting on it, but if we see a number closer to -150,000, the market may just celebrate and bargain hunters could step up again. After a strong rally on Tuesday, oil has dropped back sharply over the last two days and closed below $61.  Again, this is a play on the strong dollar.  The VIX moved back into the mid-60's, the NYSE overbought/oversold indicator is now back below the neutral area at -239 after being the most overbought that it has been all year just a few days ago and, to my surprise, bonds have rallied this week, but the strength should be short-live as overhead resistance is closing quickly.                                     Chart provided courtesy of www.decisionpoint.com That is one of those descending triangles that tends to break to the downside. Well, that's all for today.  The jobs report will be today's catalyst and it is tough to imagine the numbers will be good, but if it is, it may be just what investors are looking for to start buying again.  Thanks for reading!  See you tomorrow!