TSP Talk Blog

This is a tough commentary to write as I don't know whether to laugh or cry. The carnage continues and the TSP limits and deadlines are adding to the pain.

I did not like the action but I wanted to wait until Thursday (IFT on Wednesday morning) to get back into the G-fund after a short stint in the stock funds. Tuesday was OK, as the S&P finished higher. I received my IFT confirmation and it said I made my transfer at 10:22 AM on Wednesday. At the time, the S&P 500 was flirting with the break even level and actually looking as if it wanted to go higher. I pulled the trigger, and Bam!



A drop of over 6% that I am now stuck with until at least December as I can not make another transfer this month. Isn't timing fun? Timing is one of the toughest things to do, and when you add the 12 noon ET deadline, and transfer limits and, well, you know.

The S&P 500 finally closed below the support levels. This is a bad sign for the intermediate-term although a short-term snapback rally is possible at any time now as the market is quite oversold. The 840 level should now act as resistance for any rally, although a move the the 20-day moving average is possible.

The S&P closed at 806 yesterday and if you remember last week when the wedge pattern was forming, we said the initial downside target would be 800. Then came 755, and 700.


Chart provided courtesy of www.decisionpoint.com


There is a chance that this was the blow off, selloff that went and took out most of the stops placed under the 840 support level. That would tend to trigger a short term bottom and a turnaround higher, except for one thing:

...That Rydex Cash Flow ratio. This indicator has been eating at me all week while I tried to catch that oversold bounce. Incredibly, this chart is telling us that "the herd", "dumb money", or whatever we want to call it, is buying stocks. This is not an indication of fear. This is an indication of complacency and if you have been reading this site for any length of time, you know that this bullishness is a major contrarian signal and the kiss of death for any rally - particularly in a bear market.


Chart provided courtesy of www.decisionpoint.com

This market will only bottom out when we see signs of blood in the streets and "the herd" wants nothing to do with stocks. Instead, they have been buying up the stock funds hard since early October.

I can't seem to learn my lesson. I keep trying to catch these rallies in this bear market and the market is just not giving them to us. The returns of our premium services are still so much better than mine, but I keep trying to think I am smarter and know something they don't.

It is tough for anyone to make money in this market so protecting our capital should be job one. That said, now that I am back on the side lines until at least December, we should see a big old rally (sarcasm).

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