Heaven or Hell

Anyone trying to short term trade their TSP account is probably either in heaven or in hell this week.  The market is opening this morning on the weak side following yesterday's strong rally - A rally that gained back about 3/4 of the prior day's big losses.  It can be very rewarding, or very frustrating depending how well you are timing it.  This action has whipsaws written all over it.

I had a busy night last night so I didn't get to do much research.  It was a good sign that stocks rallied again from Tuesday's short term oversold conditions, but that rally put those indicators back to overbought territory and the market is pulling back some today (The Dow is down about 35 as I write this @ 9:50 AM ET).  If yesterday's lows hold the market is technically still in good shape.  If the market continues to fall today and takes out yesterday's low, we'll have to stay cautious and prepare for a push down to support. 

That’s all for today.  Currently 100% G fund.  Thanks for reading.  See you tomorrow.

3/01/06
Here we go again

The market has been relentless when it comes to rebounding from these pullbacks lately and here we go again.  The very short term indicators, and by very short I mean intraday to a day or two, are oversold again.  That has typically brought on at least a small bounce in the recent past.  From a bit of a longer term, the indices can still withstand more selling to get oversold.  So, we could see a bounce early but it's possible it won't last too long.

On Monday I talked about being nimble if you plan to "play" the market.  Yesterday the S&P 500 gave back the last 7 days' gains in one day and it is difficult to be that nimble.  And of course with our 10 AM ET deadline it makes it that much tougher. 


                                     Chart provided courtesy of www.decisionpoint.com

Those on our e-mail alert list saw that I moved the 35% I had in the I fund, back into the G fund.  It was a tough choice as the chances of the market giving us a little snap back rally increased the further the market fell.  But I was watching the action of the dollar yesterday and I saw it had fallen enough that the I fund may not take the full brunt of this drop.  That turned out to be correct as the I fund lost about half of what the EAFE index lost because of the weakness in the dollar.  The chances that the dollar rebounds a bit today make the I fund a bit more of a risk, hence I am 100% G fund today.

The market is again in that position where it should rebound if we are in a strong market, but if it doesn't, it should get your attention.  As I said earlier, the market has been passing these tests all year.

If the market does drop again today, but stays above some key support areas (looks like 1270 to 1275 would be a nice stopping place), it may be time to plant some seeds again.  Just trying to be nimble.  I don't know if it will be time to plant all of the seeds, but I sure wish that day would get here. 

The 10-day moving average of the ARMS index, which compares the volume in advancing issues to volume in declining issues, has been a bit flaky lately.  Normally a reading of 1.30 is an area where you want to be buying, and .90 is where'd you'd look to sell.  We have seen some strange readings and divergences the past several months in this indicator.


                                  Chart provided courtesy of www.decisionpoint.com

We haven't had a good buy signal in the 10-day ARMS index since late April of last year (A), and the sell signal in November was anything but a good time to sell.  The big market rally that started in October came from a rather benign 1.18 reading (B).  Then the indicator fell from late November through late January (C), typical action in a falling market, but the market actually peaked in late January.  Strange indeed.  That said, if we can just get a normal move (market goes down with the indicator) below 1.30 I'd feel much better about buying. 

Bonds had a good day yesterday but closed near the day's low.  The chart looks perky but from the not so rosy fundamental standpoint, it is not quite good enough to play at the moment. 

That’s all for today.  Currently 100% G fund but I'm feeling nimble.  Thanks for reading.  See you tomorrow.
 

RevShark's TSP Timing Newsletter is now available.  You can go to www.tsptalk.com/members to sign up.  TSP Timing is a weekly newsletter giving subscribers a target allocation determined by professional hedge fund manager James 'RevShark' DePorre.   Subscribers will navigate the financial seas along side the Rev while he manages millions of dollars for private investors.  Each week he will highlight TSP funds and a target allocation he believes will provide the best investment potential. The newsletters will go over charts of each fund with a technical breakdown of each by RevShark.  The subscription now includes a midweek updates as needed.

The subscription price will be $19.95/month which will include 4 to 5 weekly newsletters each month, plus the midweek updates as needed.  The newsletter will be in PDF format so you will need an Adobe Reader (Download it free here.)

Still have questions about the TSP Timing Newsletter?  Click here.