TSP Talk - Thrift Savings Plan Strategies

Market Comments

June 18, 2010

Current TSP Share Prices

Today's Commentary (Short Term Outlook)

Late rally

A late surge toward the end of the day pushed the major indices into positive territory by the close after spending nearly the entire day in the red. The Dow ended the day up 25-points.



That kind of upside action is often the result of short covering, which could be a sign that the bears are looking for opportunities to lighten up on their short positions. A short position is a bet that the market (or stock, etc.) will go down. When the market (stocks, etc.) goes up, the short position loses money.

For the TSP, the C-fund picked up 0.14%, the S-fund slipped 0.13%, and the I fund added 0.23% while the F-fund jumped 0.38%.

The S&P 500 is still hanging around the 50-day EMA, which tends to act as resistance when tested for the first time, but it could try again soon. It may be a little early to say, but we could be seeing the start of bull flag. Bull flags are bullish patterns that tend to break to the upside.

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

I'm still leaning toward the bullish side but not for too long, and I will be quick to change my mind if things start breaking down. The 200-day EMA is a key level that must hold, and if this bull flag starts to rollover instead of breakout, I may not be very patient, but I am still looking at the 2007 chart for guidance.
I've posted that 2007 market top chart several times, so I thought I'd pull it back and give you a broader view using the weekly chart. This chart leads me to believe that this rally could take us to the top of point "A" on the current chart, which would be near 1150, or if it plays out closer to the 2007 box, potentially up toward "B".

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

Again, if the rhyme ends and we start breaking down instead of following the 2007 chart, I'm done.

The TSP Talk Sentiment Survey came in at 50% bulls, 40% bears for a 1.25 bulls to bears ratio. That is still a bull signal during a bull market (defined as the 50-day EMA trading above the 200-day EMA).

The AAII Investor Sentiment Survey moved into neutral territory, and the increase in bullish percentage / decrease in bearish percentage is to be expected during market rallies.

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

But sentimenTrader.com did some research of prior situations where the bearish percentage fell by 20% or more week over week, but the S&P 500 rose less than 5% during that week. It was bullish in the very short-term (days) but the tendency was for the rally to run out of steam going forward. Not a great sign.


                             Chart provided courtesy of www.sentimentrader.com

I'll be hoping for a move to 1150 in the next week. Then I can get more defensive.

Thanks for reading. Have a great weekend!

Tom Crowley

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