Stocks rallied early but could not hold those gains and the selling picked up significantly into the close.  This is getting to be routine and getting frustrating.  The C-fund took the hardest hit losing 1.28%.  While the small caps of the S-fund lost 0.86%, and the I-fund actually gained 0.54% but that included some fair value from Monday's late rally in U.S. stocks.  Before you ask me about fair value, please check out the I-Fund thread on the message board.  Our I-fund experts are on the job there 24-7.  OK, maybe 21-6.

Looking for a relief rally, I went to a 100% S fund allocation for a short-term play anticipating some sort of a bounce.  As I mentioned yesterday, I wanted to bail out of stocks once the S&P 500 moved up toward 1490.  Tuesday morning stocks opened to the upside with a bang.  The S&P 500 made it over 1488 and then started to pullback.  I figured we got what we wanted and I sent out an email alert telling you I had decided to back off again and move into the F-fund.  By the close things went terribly wrong and we were at the mercy of the TSP trading deadline as all we could do is sit and watch as the 1% early gain turned into a 1% loss.

         

The way I figure it, if you have been in TSP for a while and your account is in the $200K to $400K range or higher, and I know many of you are there, it cost you in the area of $4K to $8K or more to sit and watch the market fall apart all day yesterday.

I am so grateful that the TSP made the change from monthly transactions to daily transactions back in 2003, but if any of you have any influence in this area, we need to find out what can be done to look toward a deadline closer to the 4PM ET market close.  Real-time transactions would be ideal, but I realize that is not practical for funds.  TSP fees are some of the lowest in the business and I would be willing to pay higher fees for the added luxury of a late deadline, as I'm sure many of you would as well.  I realize we are not supposed to trade our accounts, but there are times when you have to be able to act quickly.

OK, enough whining.  The S&P closed in an area of support.  I had hoped to sell before the market came back this far but the afore mentioned complaining tells you why that didn't work out.  The question remains - will this support, and retest of the prior low - hold? 


                               Chart provided courtesy of www.decisionpoint.com

I've noticed an interesting observation with moving averages that I've mentioned a while back but I never really hear anyone else talk about it.  That is, when a faster moving average goes below the slowing moving average, it is normally considered a warning sign, even a sell signal.  And that may be true looking out a few weeks, but sometimes the index immediately reverses during the crossover.  That reversal doesn't usually last too long as the real sell signal comes at the second crossing below the slow moving average - if there is one.  So the first crossover below gives can give us a short-term buy signal and the second crossover is the real sell signal.  The opposite is true for when stocks are moving higher and the faster moving average moves above the slower moving average.  I'm not saying that is true every time.  Just a tendency.

There is no real need to show the indicators.  We all know that the market is very oversold no matter where you look.  There is fear in the air, but the feelings are mixed about whether this is a buying opportunity or a time to step aside and let things play out to the downside.  Buying this type of action has paid off time and time again during this bull market and it may payoff here as well.  But if it doesn't, how much downside can you take?  I've watched RevShark from afar for many years in the old AOL message boards and his approach to these sell-offs is to sit back and watch it play out.  It is not important for him, as someone who trades for his living, to pick the bottom, but rather to wait until the all is clear sign before trading again.  Of course trading individual stocks is a different ballgame than managing a TSP account, but it's not bad advice.  Capital preservation is his primary goal.

Trader Fred's TSP Trader System remains on a sell signal and still no upward movement on the strength chart.  See what Trader Fred has to say today on his system page.

The EbbChart System is in the I-fund again today.  Where to tomorrow?  Read more the ebbchart system  page.

I am now in the F-fund.  As I complained earlier, I made this moving thinking I was taking with me a 1 to 2% gain in the last two days.  The reason I chose the F-fund over the G-fund was that the F-fund has been acting well lately, and I knew the G-fund was paying yesterday and probably won't pay again until next Monday.

The futures are deep in the red as I write this and we could see a washout in the morning - a capitulation like sell-off that could trigger a reversal.  Of course if that happens the market will again look to test the lows it makes.  If somehow the futures turnaround and yesterday's low holds, that could be considered a successful test.  It's never easy.  I'm still staying nimble and could make another change at any time based on what is happening.

That's all for today.  I am currently 100% F fund.  See you tomorrow.

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