Market Comments April 21, 2009 For those wondering where TSP Share Prices went, they are still posted on the home page and there is a link in the "Quick Link to" table above.

Today's Comments (Short Term Outlook)                            Printer  friendly

Too early to say Stocks dropped sharply yesterday after a worrisome earnings report from Bank of America, and more concerns over bank nationalization rumors. Financial stocks, the darlings of the recent 6-week rally, led the move down as there is concern of credit losses worsening.  The TSP stock funds lost 4% to 5%.  It is way too early to say what will happen next.  We had been suggesting that any downward reversal could be quick and that taking some profits could be a wise move, but who knows at this point?  The market could move right back up on us.  I am not anticipating that, but the recent strength has been impressive.  We are due for a pullback and all we know is that this may, or may not be the start of it.                     Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The first level of support was near 860 and that was taken out pretty easily.  The next area we mentioned yesterday was 830, right about where the declining trendline (old resistance now support) is now, and basically where we closed yesterday.  The 20 and 50-day moving averages are also hanging around that area with the 20-day at 828, and the 50-day at 816. Earnings are kicking into high gear and the market, which seemed impressed with earnings from Goldman Sachs and JP Morgan last week, is getting a little dose of reality.  IBM and Texas Instruments reported after the close yesterday with mixed results (TXI good, IBM bad).  The bottom line is earnings are down about 85% so far this quarter compared to last year.  That helps us to understand why we had a 50% decline in the major indices, but is 50% enough if earnings cannot rebound in the coming quarters?  Will the positive signs we have seen recently in the economic slowdown be a catalyst for earnings in the coming months?  Here's another look at the recent rally compared to other rebounds off of bear market bottoms.                                 Chart provided courtesy of www.sentimentrader.com You can see that it has been one of the sharpest rallies, and it is now the longest lasting without some kind of correction.  Perhaps yesterday was the start of the first. So whether we are going to make a lower low in this bear market, or if we have seen the bottom, history tells us that the current rally may not last much longer without first getting at least a  significant pullback first.  A pullback at this point is probably healthy.  The bulls wouldn't mind seeing some consolidation to regain some strength, but they do not want to see a lower low in the S&P 500. That's all for today. Thanks for reading!  See you tomorrow! Scribbler's TSP & Economic Report:  The free trial continues through the end of April.  A new report has been posted Monday morning.  Please click here for more information.