Thrift Savings Plan Talk

Nice reversal on decent volume.

Since I am now 100% in the G fund, I can't say I'm not disappointed that the market reversed a big early loss to finish in the black. It looked like we were starting that pullback I've anticipated but the relentless "climbing the wall of worry" market rallied in the second half of the day to finish positively. That was very interesting actually and gave us a little twist.

The CPI (consumer price index) fell 0.1% in May. Economists were anticipating a 0.1% increase. The core CPI, which factors out the volatile food and energy prices, was up 0.1%, less than expectations for a 0.2% rise. The numbers signaled inflation was contained.

About the interesting part; How the market reacts the day of the release of these reports is typically a pretty good contrary indicator. For example, the S&P 500 has closed higher after 6 of the last 11 CPI releases, but 20 trading days later the S&P was lower 4 of those 6 times, for an average return of about -0.1%. The 5 times the S&P closed lower the day of the release, it was higher 4 times 20 days later, for an average return of +2.0%.

So while the market was down earlier in the day, I thought the odds were that the S&P 500 would be higher in 20 days. But once it closed positively, the odds reversed as 4 in 6 times the return was negative 20 days later. A stretch? Maybe.

Oil is back over $56 a barrel. Some argue that this just sets up an inevitable negative reaction eventually as earnings will be affected. Others would say this is a sign of strength for the stock market.

That's all for today. Still playing it safe for a few weeks. Currently 100% G fund. Until next time...