TSP Talk - Thrift Savings Plan Strategies

Market Comments

September 22, 2009

Current TSP Share Prices

Today's Commentary (Short Term Outlook)

Stocks tumble early, attempt rebound

The Nasdaq managed a small gain but for the most part stocks were down yesterday as the Dow shed 41-points, but things were much worse earlier in the morning. The TSP's C, S, and I funds were down 0.34%, 0.23%, and 1.11% respectively, while the F-fund ticked down 0.01%.

Yesterday we talked about the the S&P 500 being above the old resistance line, which could now act as support as long as it holds within the next couple of days. Well, the S&P did move below the old resistance / turned new support line during the trading day, but managed to close just above it again. I don't want to get too precise about the closeness, but I don't think this was a coincidence that it closed where it did - but I do believe the support will break in the coming days.

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

I am anticipating, and welcoming some weakness in stocks. As long as it stays contained, a pullback here is just healthy action in a bull market.

Taking a closer look at the last few weeks' action in the S&P and I am looking at three very good possible targets for any imminent pullback.

Point "A" below is the 20-day exponential moving average (EMA). Point "B" is the 50-day EMA. Point "C" is that still open gap near 1016. Both moving averages are currently rising so they are moving targets, whereas the open gap is static near 1016.

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

There are other support levels below the 50-day EMA, but we'll cross that road if and when we get there.

Yesterday we also talked about some put/call ratios. This chart below from sentimentrader.com shows us from a little different angle, just how extreme things have become.

Per Jason at sentimentrader.com:

The chart below shows a Speculative Options Activity index. This is simply the number of opening options transactions that are bullish bets on the market minus those that are bearish on the market. To be more precise, call purchases and put sales are combined (since they both profit if the market rises), and then we subtract the total number of put purchases and call sales (since they both profit if the market falls).

Constructed this way, the indicator will show a high reading if options traders expect the market to rise, and a low reading if they expect it to fall. The chart below shows this measure over the past few years.


                              Chart provided courtesy of www.sentimentrader.com

If you notice, this chart is going back almost 10 years.

Taking a look below at the September seasonality chart shows that the latter third of the month does pretty poorly historically, but so far September has held its own for being the worst month of the year. Today is the 15th trading day in the month.

That's all for today.   Thanks for reading!   See you back here tomorrow.

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