Market Comments February 5, 2009 TSP Fund share prices as of: 02/04/09 Fund - G Fund F Fund C Fund S Fund I Fund 12.7676 12.4534 9.6386 11.3367 12.7120 $  Change - 0.0010 -0.0277 -0.0638 -0.0240 -0.0421 % Chg day - +0.01% -0.22% -0.66% -0.21% -0.33% % Chg wk - +0.03% -0.15% +0.85% +1.16% +1.25% % Chg mon - +0.03% -0.15% +0.85% +1.16% +1.25% % Chg 2009 - +0.21% -1.01% -7.63% -7.13% -10.82%   L2040 L2030 L2020 L2010 L Income 11.6273 11.8650 12.2155 13.5126 12.5890 $  Change - -0.0470 -0.0424 -0.0371 -0.0208 -0.0138 % Chg day - -0.40% -0.36% -0.30% -0.15% -0.11% % Chg wk - +0.83% +0.73% +0.61% +0.30% +0.21% % Chg mon - +0.83% +0.73% +0.61% +0.30% +0.21% % Chg 2009 - -6.90% -6.00% -5.00% -2.31% -1.53%

Today's Comments (Short Term Outlook)                             Printer  friendly

Too much resistance Stocks rallied early yesterday, but could not hang onto the gains by the close.  The losses were minor across the board but disheartening since the morning produced a 1.5% rally before reversing downward.  We have been talking about watching the 850 area as a possible trouble spot for the S&P 500, and as if on queue, that is where the rally ran out of steam.  The lower support is still intact, but a wedge pattern in a bear market tends to break down, rather than up.                     Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Looking for a positive, the MACD indicator is giving us another divergence although it is a little too early to say.  We saw a divergence during the Santa Claus rally as the S&P made a higher high, but the MACD made a lower high.  That told us that the rally may not last. So, if the S&P 500 breaks down in the next few days, but the MACD indicator can stay above the low reading it made in January, we could be setting up for a playable bounce. Right now we don't know if that low will hold (in the indicator) since the S&P has not made a lower low yet, but it is something to watch if we do sell-off in the short-term.  Speaking of divergences, once again the banking index is acting much weaker than the broader market.  In the past, this has not been a good sign for stocks going forward. Jason at www.sentimentrader.com explains what we saw earlier this week: ... "Yesterday was the first time in the 20-year history of the S&P Banks Index that that index dropped more than 5% on the same day that the S&P 500 rose more than +1%."                                     Chart provided courtesy of www.sentimentrader.com "The only time it dropped any more than 3% on such a day was 01/10/00, after which the S&P sunk a couple of percent over the next two days, and about -7% over the next month and a half.   "There were three other times the Banks Index dropped -2% or more on a day the S&P rose that much, and none of them were good for the broader market, as they marked tops each time and the average one-month forward return in the S&P 500 was -3.8%.  The dates were 08/25/99, 01/10/00, 01/18/01 and 12/10/08.   "If we look for -1% or greater declines in the Banks Index, then we get 9 precedents.  Again, the tone going forward in the S&P was decidedly negative.  Over the next month, the S&P was positive 1 time, negative 8 times, with an uninspiring average return of -5.0% and an average risk (-8.7%) more than twice as great as the average reward (+3.2%)." -- Jason www.sentimentrader.com I don't want to get too far ahead of myself, but I can see how this may play out, and it coincides with our other analysis.  That is, short-term pain, followed by a possible nice buying opportunity.  We'll just have to wait and see. The AGG, which I use to track the F-fund, continues to float above the 50-day moving average and some support.                      Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk It seems to be bleeding downward, but technically it is still hanging in there.  We could see a bounce if the stock market does take a tumble, but this would be a short-term opportunity as I am not looking at bonds as a long term investment at the moment - just a short-term play. Tomorrow we get the jobs report and estimates are for a loss of 500,000 jobs.  That's all for today.  Thanks for reading.  See you tomorrow!