TSP Talk - Thrift Savings Plan Strategies

Market Comments

July 23, 2010

Current TSP Share Prices

Today's Commentary

Earnings trump uncertainty in economy

Stocks were up early and stayed up the entire day closing with gains in the indices of 2% to 3% and the Dow jumped 201-points. Earnings were the catalyst this time, and I guess strong earnings trump an "unusually uncertain" economy.

For the TSP funds, the C-fund gained 2.25%, the S-fund jumped 3.12%, and the I-fund added 2.66%. The F-fund (bonds) dropped 0.08%.

Doing analysis on this market has proved frustrating. It appears the descending trend has been broken and that can sometimes lead to further upside action as we saw in June. Once that descending trend in June was broken, it eventually acted as support in early July.

The S&P 500 also broke back above the 20, 50, and 200-day EMA's intraday yesterday, but it closed just shy of the 200-day EMA. This volatility above and below the EMA's is not making it easy for us either, but the 50-day EMA is still below the 200-day so caution is still warranted, but it isl a tough call - particularly in the short-term.

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

We saw similar choppiness in 2007-2008, as the S&P 500 jumped above and below the EMA before finally breaking to the downside.

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

Of course no market repeats another exactly but I look at this as a continued warning to be careful while the 50-day EMA remains below the 200-day EMA, but we could see rallies to throw us off, just as we saw in 2007-2008.

The indicators had been fairly neutral lately but yesterday's rally did push the overbought/oversold indicator back over the +500 level. During a bull market this isn't anything to worry about. During a bear market it can be a signal to sell. Since the current market can't seem to make up its mind which it is in, we are again without much help from this indicator direction-wise.

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

A nice summer weekend to clear the cobwebs could be just what the investment doctor ordered. My head has been spinning over the last few weeks as we get whipsawed over and over.

Thank you for reading! Have a great weekend!

Tom Crowley

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