TSP Talk - Thrift Savings Plan Strategies

Market Comments

March 17, 2010

Current TSP Share Prices

Today's Commentary (Short Term Outlook)

Seasonality changing

After some positive news related to Greece, and a Fed who seems to be committed to keeping interest rates low, the market picked up where it had left off and rallied on Tuesday. The Dow close the day up 44-points, and with the help of a weaker dollar, most stocks pushed higher on the day.

For the TSP, the C-fund was up 0.78%, the S-fund rallied 0.94%, and the I-fund, with the help of that weaker dollar, gained 1.69%. The F-fund also rallied gaining 0.20%.

Although we are still not seeing much volume, the S&P 500 did breakout over the January highs like we saw the leaders (Nasdaq and Dow Transports) do several days ago. It is still trading at the upper end of the ascending trading channel, and while there is more room on the downside, momentum and the trend remain up.


                     Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

The small caps have gone nearly parabolic since early February and while momentum is pushing straight up, there is a lot of room below before we see any strong support.


                     Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

Another indication that the market is overbought - beside the fact that it has been up nearly every day for the last month - is the number of stocks in the S&P 500 that are trading above their moving averages. Yes, trading above the 20, 50, and 200-day EMA's is very bullish, but when we start seeing 90% or higher of the stocks trading above the 50 and 200-day EMA's in particular, in general it means the market is due for a rest.


                     Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

Here is a longer-term view of the percentage of S&P 500 stocks trading above their 200-day EMA. You can see that once it gets above 90%, there tends to be a short-term or intermediate-term pullback.

                     Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

About two weeks ago, I was dumb enough to try to sidestep any potential bad news in the jobs report with the thought of jumping back in stocks if we did pull back. That has really backfired on me as I have not had any good opportunities (pullbacks) to get back in since.

Now with the market being even more overbought, I am reluctant to do much of anything. If you look at the March seasonality chart below, you can see that today is the 13th trading day in March, and this week (day 11 -13 in particular) are historically strong, and the market has delivered so far. But after today, things get a little more dicey through the end of the month seasonality-wise, so perhaps I will eventually be rewarded for my patience. Time will tell. I hope you didn't make the same mistake.

For those interested, we are starting our annual March Madness Contest. For more info, please click here.

Thanks for reading. Happy St. Patrick's Day! We'll see you back here tomorrow.

Tom Crowley

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