Market Comments June 11, 2008 TSP Fund share prices as of: 06/10/08 Fund - G Fund F Fund C Fund S Fund I Fund 12.48 11.99 15.47 19.34 22.94 $  Change - +0.01 -0.08 -0.04 -0.13 -0.36 % Chg day - +0.08% -0.66% -0.26% -0.67% -1.55% % Chg 2008 - +1.63% +0.50% -6.58% -2.27% -7.35%   L2040 L2030 L2020 L2010 L Income 17.42 16.76 16.16 15.30 13.49 $  Change - -0.11 -0.09 -0.08 -0.04 -0.02 % Chg day - -0.63% -0.53% -0.49% -0.26% -0.15% % Chg 2008 - -4.50% -3.73% -2.94% -1.03% +0.15%

Today's Comments (Short Term Outlook)                             Printer friendly

No rebound After Friday's huge sell-off, stocks have not really given us much in the way of a rebound.  There have been some intraday bounces, but nothing is sticking.  The dollar rallied, oil dipped, and bonds continue to slide.                The S&P 500 is still floundering as it trades below the neckline of that head and shoulders (H&S) pattern.  The market is getting quite oversold, yet we are not seeing much interest in buying.  That could be troublesome looking forward as something odd seems to be brewing.                     Chart provided courtesy of www.decisionpoint.com - with analysis by TSP Talk The dollar has rallied strongly the past couple of days, and remains in a basing formation trying to form a bottom.  Like stocks, it is trading below the 200-day moving average and, until something changes, we have to assume this is a bear market rally for the dollar.  The strength in the dollar had a lot to do with yesterdays' 1.55% drop in the I-fund - about 1% of it.                     Chart provided courtesy of www.decisionpoint.com - with analysis by TSP Talk One of reasons for the dollar's strength is the rise in bond yields, in particular the shorter-term yields.  Take a look at the sharp rise in the yield of the 2-year treasury.  This action is telling us that the Fed is more likely to raise rates at their next meeting, than cut or even stay put.                     Chart provided courtesy of www.decisionpoint.com - with analysis by TSP Talk Because of that, the price of bonds, and our F-fund, are declining.  Bond prices move inversely to bond yields, so the bond fund has been hit hard lately.  The AGG, which our F-fund tracks, is back to where it was about 9-months ago.                       Chart provided courtesy of www.decisionpoint.com - with analysis by TSP Talk So, bond rates are going up, something that normally happens during a strong economic period.  Inflation also causes rates to rise, and higher inflation is normal during periods of economic growth.  When economies strengthen, the currency (dollar) usually strengthens also.  When all that is going on, stocks tend to be the beneficiary and rise along with them.  But that is not happening right now. Instead, inflation is being caused more by rising energy and food prices, and not because of economic growth - unemployment numbers are rising as they would in a declining economy.  I don't know how this will play out but something does not seem right.  For that reason, I am remaining cautious, although I will look for short-term buying opportunities that should pop up, but I'm not ready to gamble just yet. That's all for today.  Thanks for reading.  See you back here tomorrow! Have questions?  Visit our message board for answers.  Would you like to be on our email alert list?  We will send you an email when there is a change to our asset allocation or market outlook.  Your email address will never be given out.  Read our privacy policy.  By signing up you agree to the TSP Talk Terms of Service.  More details below **. Are you bullish or bearish?  Join the Weekly Sentiment Survey. Like what you're reading?  Tell a Friend about us. ------------------------------------------------------------------------------------------------------------------- ** By joining our email alert list you will receive an email each time we initiate a transfer or change our market outlook.  You may also receive an email each Monday morning reminding you that our comments are updated daily.  We will always send out these emails prior to making the transfer myself but we can not guarantee you will receive it in time to make a transferide to follow our transfers in your own account, you do so at your own risk.  There is always a possibility for a loss in your account.  These transfers could come very often and you may have to act quickly to make the deadline.  Please consider your investment strategy before taking any advice or making any transactions.  By reading the contents of TSP Talk.com and accepting the email alerts, you must agree to the Terms of Service.  Thank you. TSP Talk