Thrift Savings Plan Talk

Now what?

Back in April and May when the last rally was underway, we were asking, how high? Now that the pullback appears to have begun we ask, how low?

As I mentioned Friday (see Friday's comments below) the 1994 pullback only lasted seven days while the 2004 summer pullback lasted six weeks. All we can do is keep an eye on the indicators and on the current major market stimuli; oil, earnings, interest rates, and economic data.

One indicator I watch closely near tops and bottoms is the McClellan Oscillator 21-day moving average. The Oscillator itself (see chart below this NYSE chart) gives short term buy / sell signals, but the 21-day moving average gives a better intermediate term signal.

Chart provided courtesy of www.decisionpoint.com

You can see the moving average (blue line) is in the overbought zone but the daily indicator (black line) has dropped close to the oversold area. A move to the oversold area is not an automatic buy signal, but it will tell us we could see a pause to the sell off. When the moving average gets to the -100 line or lower, it is usually a good time to get aggressive in stocks. Early February and early April both worked out that way. Right now as I mentioned, that moving average is in the sell zone.

So it looks like we'll have to either be patient, or take it day by day trying to pick the short term buy and sell signals. I will keep you posted on the progress of the indicators.

The new "smart money" Sentiment Survey showed bulls at a very low 11%. Bears were 42%. That of course came on the heals of two terrible days. I would think they would have shown a little more bullishness expecting at least a bounce, but that 11% tells me the smart money is worried. Those numbers change dramatically from week to week so next Monday it could be completely reversed. They are usually more flexible than "the herd."

The TSP Talk Sentiment Survey results are in for this coming week:

For the week coming of 6/27 - 7/01, I am...
		Ratio
Bullish (up)		14%
Bearish (down)		66%
Neutral		19%

See below to find out how to be a part of this survey.

It should be an interesting week as there is a lot going on. We will find out if bargain hunters are ready to buy or if there will be more damage done.

That's all for today. Currently 100% G fund. Until next time....

Administrative Note: I have started the TSP Talk Weekly Sentiment Survey which will be a poll sent via email each Friday asking you one question; Are you bullish, bearish or neutral for the market in the coming week? If you want to be a part of this, click here ... Join the Weekly Sentiment Survey and input your email address. When the confirmation page comes up, there will be two boxes on the left side. One to join the Weekly Survey, and one to join the email alert list. Choose the box of the list you wish to be added to. If you are already on the email alert list, or you would like to be, you will need to check both the Email Alert and the Weekly Sentiment Survey box. Thanks!