Do stocks have more left in them?  More F fund.

Some of the shorter term indicators are coming down toward oversold levels.  Short term oversold levels have been very good buying opportunities since early November.  That is the sign of a strong market and it will continue until, well, until it doesn't.

Once oversold levels are not bought you see the signs of a market turning, but we haven't seen that yet.  I have been concerned about the intermediate term indicators which are more inclined to pick up on market tops and bottoms.  I had been anticipating a decent market turndown to help set up a better buying opportunity.  It has been my experience that chasing a runaway market can burn you.  In late 2005 and the first week of 2006, that wasn't the case.  It would have paid us to chase.  I have also been rethinking the severity of the next pullback. 

I have also been anticipating a big year for stocks in 2006 once we did get that pullback so it gives me in a bit of a dilemma.  Do we buy now, forget about it, and anticipate some large gains by the end of the year?  Or do we patiently wait for a better opportunity which brings the risk of missing more gains?

The small caps of the I fund have done very well for TSP participants.  But take a look at the Wilshire 4500 chart below.   


                                   Chart provided courtesy of www.decisionpoint.com

For nearly two years there has been a very nice uptrend and I don't see any reason for that to end.  But we are pushing the upper end of the trend channel and we could see some weakness while remaining in that bullish channel.  A bit of a short term yellow flag.

The S&P 500 has broken out as well but the trend is not quite as bullish as the small caps.  Large cap stocks have been picking up a little steam lately but from a sentiment point of view, too many people seem to be dismissing small caps which could be reason enough to continue to play small caps when in the stocks funds.

Bonds have continued to rally in shadow of the large gains in stocks.  I usually display a chart of the 30-year bond to illustrate the action of bonds but I found the chart of the Lehman Aggregate Bond Fund which is what our F fund tracks.


                                   Chart provided courtesy of www.decisionpoint.com

You can see the rally is very much alive and the trend seems to be continuing higher.  I am anticipating the G fund paying the penny gain today (Tuesday) so I will move the 50% I currently have in the G fund, and move it all to the F fund for tomorrow.

We have a slew of earnings reports due out this week, and an escalating worry over Iran and the price of oil, which adds up to a very interesting week for stocks and bonds.

So, while I wait for stocks to give a better opportunity, I will make an interfund transfer this morning before the deadline going to 100% F fund.

That's all for today.  Currently 50% G, 50% F but that will change to 100% F fund.  Thanks for reading.