Market Comments January 13, 2009 TSP Fund share prices as of: 01/12/09 Fund - G Fund F Fund C Fund S Fund I Fund 12.7500 12.6603 10.0651 11.7723 13.8177 $  Change - 0.0022 0.0338 -0.2313 -0.3478 -0.2716 % Chg day - +0.02% +0.27% -2.25% -2.87% -1.93% % Chg wk - +0.06% +1.15% -6.53% -5.79% -5.02% % Chg mon - +0.07% +0.63% -3.54% -3.56% -3.07% % Chg 2009 - +0.07% +0.63% -3.54% -3.56% -3.07%   L2040 L2030 L2020 L2010 L Income 12.1534 12.3268 12.6096 13.7105 12.7105 $  Change - -0.2273 -0.2012 -0.1694 -0.0863 -0.0540 % Chg day - -1.84% -1.61% -1.33% -0.63% -0.42% % Chg wk - -4.73% -4.16% -3.47% -1.65% -1.11% % Chg mon - -2.69% -2.35% -1.94% -0.88% -0.58% % Chg 2009 - -2.69% -2.35% -1.94% -0.88% -0.58%

Today's Comments (Short Term Outlook)                             Printer  friendly

Breakdown? Stocks followed through on Friday's sell off with another round of selling yesterday.  The TSP stock funds dropped between 2% and 3% and bonds saw another modest rally as the F-fund picked up 0.27%.  The poor jobs report, which was actually in line with estimates, seems to have been a dagger in the newly bullish investors' hearts who had been buying into the recent rally.  Sure, we could see an optimistic rally leading into the Inauguration next week, but we have such a long way to go in this economic cycle, and earnings are going to be the next catalyst for the market, not a inaugural speech - regardless of its tremendous historical significance. The thing many analysts are worried about now is that earnings estimates are still way too high for the S&P 500 stocks in 2009 given the economic climate.  No one expects a good round of earnings this quarter, but if they come in lower than expected and more importantly, guide lower for the next quarter or two, we could see the start of the next leg down.  I can't imagine very many companies will be surprising to the upside.  Alcoa starting things off after the bell last night and they missed their estimates pretty badly.  But the futures are actually slightly higher as I write this so maybe expectations were worse?  Either that or it's just a temporary reflex bounce after a deep two-day sell off. The S&P 500 has now clearly broken to the downside of the recent rising wedge.  So far the bear market rally has been classic, stalling after about a 25% rebound, right near the 50-day moving average.  Support is getting thin and despite a possible short-term rally before Inauguration Day, a test of the lows could be in the cards in the coming weeks.                        Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The recent Santa Claus rally did suck in a lot of money into the bull funds and / or out of the bear funds.  The bear funds plus money market to bull funds ratio shot up (on the chart - lower in number) to 0.76, a ratio not seen in a few years.                        Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The does tend to be a move higher near the end of the year as new money enters the market, but this ratio is amazing considering the carnage we went through in 2008.  I'd say investors are being quite complacent expecting this bear market to end so soon.  This is a bearish reading for the market.  Earnings season is just getting kicked off.  This week we will see some big companies such as Intel and JP Morgan reporting.  It should be interesting.  Here is the earnings calendar for this week. That's all for today.  Thanks for reading.  We'll see you tomorrow!