TSP Talk - Thrift Savings Plan Strategies

Market Comments

February 25, 2010

Current TSP Share Prices

Today's Commentary (Short Term Outlook)

Another flag

Stocks rebounded yesterday regaining much of the losses dished out on Tuesday. The Dow gained 92-points after the Fed reaffirmed his commitment to keep rates low while the economy tries to recover.

Is that news enough to reverse the action of Tuesday's awful Consumer Confidence report? I'd say it doesn't matter. There is a lot of uncertainly out there and investors are jumping around looking for direction. I just keep watching the charts and indicators, which I hope tell the story a little better than the myriad of news headlines that keep our heads spinning.

For the TSP, the C-fund gained 0.99% while the S and I funds each picked up about 0.8%. The F-fund slipped 0.02%.

After just one day below the 50-day EMA, the S&P 500 crawled back above it yesterday so we will not be getting the 3 consecutive closes below the 50-day EMA, which keeps us in bullish mode. Now if the 20-day EMA can slip back above the 50-day EMA, we'll really be in business. It is currently 3-points below it.

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

The recent pullback gives us another possible flag formation. This one is a bull flag, which tend to eventually break upward. I'm not sure of the confidence I have in it since the recent bear flag failed to break down, breaking upward instead.


                    Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
We can look at this two ways. It is either that we may have to be leery of the flag formations right now, or perhaps the market is strong enough to move higher despite the direction of the flags? The flag portion of this current bull flag is not very long at this point, but there is a rising support line that could help hasten the breakout. I'd like to see the 1095 area act as support, although the overnight futures are testing that area as I write this.

The S&P 500 put in an inside day yesterday, meaning yesterday's action had a lower high and a higher low compared to Tuesday's range. This doesn't give us any edge to what might happen today, but both the Nasdaq and the Russell 2000 (small caps) did make slightly higher highs, and that is something.



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

If that can happen again today, a higher high and higher low, then we could see another leg up and start to get a test of the January highs, but it's a little early to say.

As I mentioned, the futures are trading down sharply late Wednesday after Standard & Poor’s said it may downgrade Greece’s credit rating again. I don't know how many times we can sell off on this, but it doesn't sound like these problems are going away any time soon.

Thanks for reading. We'll see you back here tomorrow.

Tom Crowley

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