Stocks tumbled Wednesday, and right on queue.  It's nice to see the market do what our  indicators say is likely to happen.  The extreme overbought reading told us we could see some short-term selling and we got it.  All three of our trading systems were out of the market.

The S&P 500 found some support at the 20-day moving average after falling back below the 50-day moving average.  We could be looking at another test of the 200-day moving average (exponential) in the low 1450's. 


                                  Charts provided courtesy of www.decisionpoint.com

I wanted to correct something I said yesterday.  I had said the 10-day moving average of the OEX Index is showing that the "smart money" is starting to back off.  What I should have said was the  that the 10-day moving average of the OEX Index put/call ratio is showing that the "smart money" is starting to back off. 

I am anticipating another possible day or two of selling but I will look at it as a buying opportunity.  If we are down big again this morning I may go ahead and make a move into stocks.  We'll have to see.

The EbbChart System went into cautious mode right on time as the system side-stepped another bad day after catching the prior gains.  And, the F-fund picked up over 0.50% on the day - a big day for bonds. That brings the 2007 gains up to 24.2%.  Check out the EbbChart page to see where it goes next.

Trader Fred's TSP Trader System remains in the F-fund.  He has an interesting new chart to show today on his system page.  Fred's system has quietly made about 10% so far this year - nearly doubling the return of the S&P 500 and C-fund.   

All three of our trading systems will be out of the market again today.  If they are right and we get a modest dip in stocks, we should be looking at another decent buying opportunity.

Did you happen to see the survey on Fedsmith's TSP Corner article?  They want to know how you feel about the possibility of having to pay fees for making interfund transfers.  You will read a lot of different opinions. 

My opinion is that a small fee sounds reasonable for excessive trading, but remember, the L-fund accounts rebalance every night.  That is the same as doing a daily interfund transfer.  And they spent millions (of our money) to promote those L-funds.  Not that I have anything against the L-funds.  On the contrary - they are great investment vehicles for the majority of investors who don't watch the market regularly.  But theoretically, the daily rebalancing costs as much as it does someone who makes an intraday transfer every day of the week.  Why should active members have to pay and not those in the L-funds?  Maybe I'm missing something.

Of course those who responded who are buy and hold type investors want active members to pay the fees.  Sounds reasonable.  But they also seem to feel that active traders are wild, undisciplined, gamblers who lose money and are running up those transaction fees.  I guess that they haven't seen what an active approach like the EbbChart System is capable of. 

What's interesting is that just last year they were talking about how the cost of running the TSP is lower than anticipated.

The other problem is that they are considering limiting transactions again - like they used to do before June of 2003.  That will hurt.  We may need to start contacting our Senators and Representatives because this will really set us back.  They obviously don't like us controlling our own money. 

That's all for today.  I am currently 100% G fund for now.  See you back here tomorrow.

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