Fund share prices as of: 6/07/07

Fund -	G Fund	F Fund	C Fund	S Fund	I Fund
	11.96	11.19	16.63	20.32	24.03
$  Change -	+0.01	-0.06	-0.29	-0.40	-0.53
% Change -	+0.08%	-0.53%	-1.71%	-1.93%	-2.16%
	L2040	L2030	L2020	L2010	L Income
	18.03	17.17	16.37	15.11	13.14
$  Change -	-0.30	-0.25	-0.21	-0.11	-0.05
% Change -	-1.64%	-1.44%	-1.27%	-0.72%	-0.38%

Stocks and bonds tumble

The bad news is, I was 100% in the F fund yesterday and the 6 cent loss in that fund was possibly the largest one day drop since they started TSP share prices.  The good news is, I wasn't in the stock funds. 

Yesterday's sell-off in stocks was actually triggered by the bond market as bond yields continue to move higher.  Bond fund manager Bill Gross, a legend in the bond world, stated that after 25 year of being bullish on bonds, he is now bearish.  Gross' statement pushed the 10-year note down 1 5/32, its yield rising 5.12%, its highest level since July 2006.

So missing the drop in stocks was bitter sweet as the F fund lost 0.53%, a hefty loss for bonds in a single day.  Wednesday's gap down was one of the largest in over 3-years (point A below.)   Back in 2004, the last major gap down, bonds floundered for a few days but then quickly filled the gap.  That could happen again as people are as bearish on bonds now as we have seen in a long time.  Sentiment works the same for bonds - they can rally when things look their worst. 


                                   Chart provided courtesy of www.decisionpoint.com
 

Of course all of the short-term indicators are oversold for both stocks and bonds and we could be looking at a rebound, but it can be dangerous to buy stocks here.  The S&P is only down 3% from its high.  You know I have been longing for a 10% correction, just to get it out of the way.  Historically stocks have averaged a 10% correction about once per year, even during bull markets, and it's been over 4-years since the last one.  I know that is wishful thinking, but 3% is nothing.  I'll take 6% at this point.

Ebbnflow, the creator of the EbbChart System had mentioned on the message board the other day that he saw the signs in the market that have led to 2% drops in the past.  He expected that could take place on Wednesday.  He was a day off.  The EbbChart System is in the G fund today but will make an interfund transfer this morning to go back into the I fund for Monday, but I'll let you read the ebbchart page for the details.

Yesterday's sell-off triggered Trader Fred's TSP Trader System stops and the system moves to a sell signal and 100% G fund allocation.  Read more on his system page.

The TSP Talk Sentiment Survey system just barely moved into a buy signal after the 1.21 to 1 bulls to bears ratio.  It will make a transfer this morning to be 100% S fund Monday. 

That's a lot going on and a lot of cross currents to wade through.  I will decide what I am going to do with my account sometime this morning.

That's all I have for today.  I am currently 100% F fund.  Have a great weekend!