Market Comments February 13, 2009 TSP Fund share prices as of: 02/12/09 Fund - G Fund F Fund C Fund S Fund I Fund 12.7753 12.5769 9.6849 11.4648 12.5923 $  Change - 0.0010 0.0172 0.0197 0.0557 -0.0636 % Chg day - +0.01% +0.14% +0.20% +0.49% -0.50% % Chg wk - +0.05% +1.13% -3.78% -3.52% -3.89% % Chg mon - +0.09% +0.84% +1.34% +2.30% +0.30% % Chg 2009 - +0.27% -0.03% -7.18% -6.08% -11.66%   L2040 L2030 L2020 L2010 L Income 11.6619 11.8985 12.2451 13.5383 12.6110 $  Change - 0.0073 0.0068 0.0050 0.0039 0.0035 % Chg day - +0.06% +0.06% +0.04% +0.03% +0.03% % Chg wk - -2.94% -2.57% -2.14% -0.98% -0.65% % Chg mon - +1.13% +1.02% +0.86% +0.50% +0.39% % Chg 2009 - -6.63% -5.74% -4.77% -2.13% -1.36%

Today's Comments (Short Term Outlook)

Flat - sort of Boy, was I wrong.  Yesterday I said, "... I don't think today [meaning Thursday], or the rest of the week, will be very flat. I'm looking for a big move one way or the other."  The market closed about as flat as it can, but the route it took wasn't exactly conventional.  The Dow was down nearly 250 points at 3 PM ET, and closed an hour later down just 7.  So we had a big move, in both directions.  Heading into a 3-day weekend, I think today could see similar fireworks, but where she stops, nobody knows. Just when you think you know which way things may go, they get turned upside down.  I don't know if this is what was "in the air" as I talked about yesterday, but today's market reaction should help us learn more, although I will explain down below why Tuesday may be tricky. The big reversal was triggered by a story released by Reuters saying the Obama administration is working on a program to subsidize mortgage payments for troubled homeowners who have gone through a repayment means test.  Apparently, the plan is to re-determine the "fair value" for homeowners who are underwater, recalculate their payments, then the government pays the difference.  I guess that's good for those who can't afford their mortgages, but it will just be an additional multi-billion dollar burden on taxpayers.  Your children and grandchildren will be footing the bill. I don't always understand exactly "why" the market goes up and down, which is why I am more interested in "when" the market goes up and down.  If the reason the market rallied on this news was because it brings more clarity to the stimulus, then so be it.  All I am interested in is that the S&P 500 broke below the lower support of the wedge, and closed back into it.                      Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk This could be a false break out. Today's action will help sort this out.  If the support holds, and the S&P can stay within the wedge, then we have a nice little reversal pattern and we should see a move above yesterday's high today. Otherwise, yesterday would just be another lower low and lower high day, and today would continue the downtrend The MACD indicator above, still shows an underlying improvement, but since we are in an oscillating trading range rather than a trending market, the overbought/oversold indicator is a better tool.  Unfortunately, at -10, this indicator is dead neutral - no help.                     Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The 10-day moving average of the CBOE put/call ratio seems to have peaked and is turning down.  This is a bearish reading for stocks, as it was in early January.  The "dumb money" had become overly bullish.                     Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk There was no change in this week's TSP Talk Sentiment Survey.  34% bulls, 51% bears, which is a 0.67 to 1 ratio and a neutral reading, and the same as last week's results, so the system remains on a buy signal for next week.   The AAII Sentiment Survey came in at 33% bulls, 39% bears for a 0.85 to 1 ratio. I probably should have posted this yesterday, but here is the seasonality chart for President's Day.  This is one holiday that doesn't seem to have a positive bias before or after it.                              Chart provided courtesy of www.sentimentrader.com We know that we can not actively trade anymore, but our Ebbchart and Trader Fred Systems still provide day to day information about potential short-term swings in the market, even though we can't always act on it in our TSP accounts.  One thing the daily Ebbchart is showing today is that we should have reversal day on Tuesday.  Just Tuesday.  This pattern is not looking past Tuesday.  It is just pointing out a pattern that says, whatever happens today, expect an opposite reaction on Tuesday.  I don't know if that helps anyone, but I find information like that very interesting. By the way, I decided to get out of the F-fund after the 3-day rally in bonds.  The rally may or may not continue, but I am not going to get greedy.  So it's back to G for my 1st transfer in February. That's all for today.  Thanks for reading.  Enjoy your long weekend.  We'll see you on Tuesday.