TSP Talk - Thrift Savings Plan Strategies

Market Comments

May 11, 2010

Current TSP Share Prices

Today's Commentary (Short Term Outlook)

Bottom or temporary bounce?

As the overnight futures indicated, stocks were up huge at the open yesterday, and hung onto most of those gains by the close. The Dow was up 405-points on the day, and the S&P 500 and Nasdaq actually did better.

For the TSP, the C-fund gained a whopping 4.40%, the S-fund outdid that jumping 5.27%, and the struggling I-fund rallied 5.64% on the day. The F-fund lost 0.22%.

The S&P 500 shot right up the top of the trading range we talked about yesterday which is the range created by last Thursday huge drop. I am going to leave some of Monday's commentary down below in case anyone missed the discussion with sentimenTrader.com regarding that important trading range.

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

That upper resistance also happens to be in the same neighborhood as the 50-day EA (1167), and the S&P remains below both of them. The bulls will need a follow-through day today or sometime this week to break that double barrier of resistance.

The bulls would have have also liked to have seen the trading volume a little higher on the up day, but Thursday and Friday's volume was a tough act to follow as it was reaching panic / capitulation levels.

Officially, yesterday was the 4th close below the 50-day EMA for the S&P, and if we don't see a push back above it today, 5 days in a row sows up the prospect of a more bearish market over the short to intermediate-term. At least by my rules. But the way the market has acted over the last 12 to 14 months, I would not be overly surprised if investors can do just that - push it above resistance.

I was happy to see the rally as it gave me an opportunity to sell at a much higher price. But now I get to find out if I made the right decision.

Just as a side, the TSP Talk Sentiment Survey System had moved to a buy signal for this week, so it took advantage of yesterday's big rally in the S-fund, after missing last week's losses. That puts the system's return at over +18% for 2010, and it sits atop of the TSP Talk AutoTracker leader board. I wish I could say the same for my account, but I wasn't smart enough to follow the system.

Thanks for reading. We'll see you back here tomorrow.

Tom Crowley

From Monday's commentary...


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

I always look forward to Jason's commentary at sentimenTrader.com after a day or week like we had last week. He always has great insight into how the market reacted during previous similar situations.

As I wrote on the chart above, Jason says history suggests that the market could trade within Thursday's daily trading range for the next several weeks to months. He had several examples, but I'll just post one to illustrate the point...


                             Chart provided courtesy of www.sentimentrader.com

Here were Jason's conclusions:

* There might be 1-3 days more selling pressure after the shock, especially intraday the following day...but that was more typical when stocks ended near their low on the shock day, unlike yesterday.

* After the initial low, there was typically a 2-5 day vicious rally.

* Every time, that initial rally failed and we ended up re-testing the panic low.

* The intraday range during the shock day (the yellow highlights) contained most of the trading for the next 1-3 months - any probe above or below was usually beaten back quickly.

* All of these occurrences precipitated fairly major intermediate-term market bottoms.

I suspect today will start the 2-5 day "vicious rally" and I will use it to get the heck out of the way. It may be the wrong thing to do, which is what I am prone to do, but if we are going to make lower lows or test Thursday's low, I want to have cash on hand to take advantage of it.

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