TSP Talk - Thrift Savings Plan Strategies

Market Comments

June 2, 2010

Current TSP Share Prices

Today's Commentary (Short Term Outlook)

More late selling

Stocks bounced around quite a bit yesterday. The indexes opened down sharply, and twice they rallied to solid gains, only to see a second weak close in a row. By the close, the Dow gave up another 112-points.


For the TSP, the C-fund lost 1.71%, the S-fund dropped 2.83%, and the I fund fell 1.01%, while the F-fund picked up 0.06%.

The S&P 500 continues to back off from that 200-day EMA resistance but remains above the May 6th low (yes, that trading range thing again.)

For quite some time, going back to early 2009, we have kept an eye on that 2007 chart as we have seen a very strong similarity in the action compared to today. The next two charts will show you what I mean...

                     Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
If the rhyme continues, we could see some volatile action as we appear to be near the circled area below, as the bulls and bears fight it out. I would really like to see the S&P recapture the 200-day EMA as much of that volatility after point "F" in 2007 was done above it.

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

The market rarely, if ever, gives us an easy opportunity like an exact chart match, but this one has gone long enough that it is tough not to keep watching.

The AAII Investor Sentiment Survey moved to a bulls to bears ratio of 0.59 to 1 last week, which is very bearish - but bullish for stocks. Since last summer there have only been two other weeks with a lower ratio and a higher bearish percentage, and the market was able to move higher in the coming weeks both times.

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

The NYSE overbought/oversold indicator continues to pull back from the descending overbought trend, and it is well off of May's extreme oversold levels. That could mean we have room for more downside action, but the -1200 reading has been pretty good at giving us at least a short-term bounce, even during the bear market.

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

As I mentioned yesterday, I am hopeful that we have seen a short-term bottom, but that the longer-term is another story. If the 2007 rhyme can continue and the May 6th trading range can hold on the downside, we could be close to another rally. If, on the other hand, the May 6th low is taken out, I will have to rethink the plan.

Thanks for reading. We'll see you back here tomorrow.

Tom Crowley

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