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Market Comments June 15, 2011 Current TSP Share Prices Twitter

Today's Commentary

Turnaround Tuesday The market was very oversold and sentiment was so bearish, that something as benign as a retail report that wasn't "as bad as expected", triggered a strong rally.  The Dow gained 123-points.                                     For the TSP, the C-fund gained 1.27% yesterday, the S-fund jumped 1.83%, the I-fund was up 1.35%, and the F-fund (bonds) dropped 0.39% as bond yields rallied and seemed to broken out of their recent downtrend.  The S&P 500 rallied sharply but could certainly use a follow-though day after yesterday's high hit the old support lines, which have been acting as resistance since broken.  As oversold and overly bearish as the indicators are / were, the 20-day EMA, and possibly the 50-day EMA could be potential targets for this relief rally - if the bulls can break that resistance.                                                  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk More on the sentiment front: This chart shows what Rydex Fund inventors / Traders are actually doing with their money, as opposed to what they "say" they are doing, which is what a sentiment survey does. This indicator shows the ratio of cash that investors are putting into bearish mutual funds (bets that the market will go down) plus cash put into money market funds - divided by the amount of cash put into bullish mutual funds.  The nearly 1 to 1 ratio means Rydex traders are the most bearish that they have been since prior pullbacks in the bull market that started in March of 2009.  You can see that only the bear market in 2008, and the correction last summer, had more bearish readings.                                                    Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk                           Like Sentiment Surveys, this data is considered a contrarian indicator so the more bearish investors get, the more likely we are to see a rally. Bonds have been rallying as bond yields have been falling steadily since early April.  The recent descending trend in yields was broken yesterday so like stocks, perhaps yields are ready for a relief rally.  This would be bearish for the F-fund as bond prices fall when yields go up.                                                    Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The 50 and 200-day EMA's are upside targets for the 10-year T-note yield. There are many folks who are skeptical of yesterday's rally, including myself, but we have been so overdue for a bounce that it is no surprise that we got one.  I have been waiting for some kind of rally to allow me to sell, but my plan remains to see if the S&P 500 can move back up to the 50-day EMA, and allow any rally to test it.  A rally during a true correction will likely fail at the 50-day EMA, but if this is just a pullback in the bull market, the S&P 500 should be able to reclaim the 50-day EMA.  That means I am holding onto my stock fund allocation until we see how this is resolved. Thanks for reading!  We'll see you back here tomorrow..   Click here to discuss today's Market Commentary Tom Crowley

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