Tuesday's action was exactly what you'd like to see as a sign of a bottom. There are certainly no guarantees but I really liked what I saw; A high volume panicky sell off early followed by a strong late day rally. So far so good but a little too early for high fives.
If this does turn out to be a short term (weeks) bottom, it demonstrates why it is so difficult to perfectly time our TSP accounts. If we were to have stayed on the sidelines waiting for the turnaround which may or may not have started, we not only would have missed yesterday's gains, but also any potential gains today (Wednesday) because the reversal started after the deadline on Tuesday. So the earliest effective date you could have had your account assets go from the G fund to a stock fund would have been Thursday morning. It can be safer that way but if you trust your indicators when they tell you the downside should be limited, you can be more at ease being in stocks when things look their worst. Again, it may be too early to be gloating but it was a nice day.
It may have been a little too clean that the S&P 500's reversal came exactly at 1171, where the new bullish trend line was drawn. As I mentioned the other day, if 1171 doesn't hold, 1163 has some very solid support...
Chart provided courtesy of www.decisionpoint.com
Oil was down well over a dollar Wednesday which sure helped things. I'm starting to wonder which is influencing which. Is the stock market going up because oil went down, or are people selling oil because the market is up? The Fed's minutes on the economy seemed to be the real catalyst this time.
The dollar's rally stumped the I fund keeping it in the red but yesterday's late gains qualify as a possible day where the I fund plays catch up the following day. I look for a good day in the I fund today, assuming the dollar doesn't rally strongly. By the time we had the rally yesterday it was too late for us to do anything about it.
Before I go over-analyzing things any more, I think I will just enjoy the reversal and hope it continues.
That's all for today. Currently 60% C, 40% S fund. See you tomorrow.
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